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DMA lecture notes summary
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Digital Marketing Analysis Lecture notesWeek 46 – Lecture 1: Introduction
Terms:
Marketing 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 (American Marketing Association).
Digital marketing 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 (Financial Times)
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.
Digital marketing extends the opportunities of traditional marketing; creates new opportunities but also challenges.
Online marketing Term referring to the Internet and e-mail based aspects of a marketing campaign. Can
incorporate banner ads, e-mail marketing, search engine optimization, e-commerce and other tools. Definition mainly
focuses on communication and internet and therefore is a narrow definition for online marketing (American Marketing
Association)
Moore’s Law:
Moore’s Law states that the number of transistors on a microchip in a dense integrated circuit doubles
approximately every two years. Changes are made faster and faster and material smaller and smaller.
This does not only apply for computer chips but also about other digital electronics (memory capacity, becomes
cheaper, size of pixels in digital cameras)
Digital possibilities grow exponentially.
Annual growth rate is 60%, compound growth over 10 years is 100%.
Storage different media:
The physical factors are decreasing (8 inch floppy disk Blu-ray) but also the costs of storage decreases
exponentially. 2017: €0,029 per GB 2019: €0,019 per GB. The decreasing costs still seems to hold today.
‘Law of the handicap of a head start’
Meaning that some countries will skip certain phases (directly wireless internet) of the internet as they will catch up.
First in developed world, later also in developing world. Desktop is more common in developed world, mobile usage
more in developing world; reason why? Developing world are directly introduced to latest technology.
Nielsen’s Law:
Users’ bandwidth (= aantal bits per seconded dat een verbinding kan verwerken) grows by 50% per year (10% less
than Moore’s Law for computer speed). The compound growth over 10 years is 57%.
Data is not a goal in itself:
Data creates information (data with analysed relationships and connections), creates knowledge (contextual
information) and understanding the knowledge creates wisdom. It is about how the analyse and use data to make
better decisions.
,Market share of online retailing growing:
Online retailing wins market share from traditional retailing.
There is quite a large difference between categories and differences between countries.
In the UK Online Share is the highest, followed by the US. In Italy it is the lowest.
Research possibilities in digital marketing:
Digital marketing allows companies to better target, better analyse, and better communicate with individual
customers.
Customers can be tracked individually through their different stages through cookies and other tracking techniques.
A/B testing is quite often used to see the effectiveness of different tools, services, products (Facebook often selects a
small group and exposes a special feature to them to see their activity).
,Week 46 – Lecture 2: Online Advertising
Online advertising expenditure:
Search Engine Advertising (SEA): paid search on search engines.
Display advertising: advertising on websites, apps, social media through banners or other ad formats.
Both in absolute number as well as the total advertising budget digital marketing is growing (especially Search
marketing and Display advertising), social media is the quickest growing element. Even e-mail marketing is growing
relatively fast.
The different forms of online advertising:
1. Search Engine Advertising
2. Affiliate programs promote customers to promote a product/service, third party receives a benefit
3. Display banner advertising
4. Online video ads
5. E-mail advertising
6. Retargeting serving targeted ads to people who have already visited or taken action on your site
Compensation methods:
In traditional (mass)media the costs of an advertisement or commercial depends on a few factors
- Type of advertisement (print, sound, video)
- Target group (e.g. broad vs specific)
- Size and position of the advertisement
- Audience size (biggest factor affecting the costs, reach)
- Quantity (more expensive to buy 1 instead of a bulk)
For online advertising it is almost similarly to traditional (mass media) but then you can have more control on how
many people to reach (in traditional mass media you do not specifically know who you reach).
- Cost per mile (CPM); amount to be paid per 1.000 ad impressions, pay when someone sees your add,
typically used in banner advertising. Depends on different media; radio is low, print is expensive
- Cost per click (CPC); amount to be paid per click on an ad; search engines.
- Cost per action/acquisition (CPA); amount to be paid when a click on the ad led to a certain action (mostly
used in affiliated programs).
CPM, CPC and CPA are easily comparable if you know the click-through rate and conversion. Click through rate is
on average 1.0%. ROI can be calculated for different campaigns, for calculating the ROI it is important that
advertisement is solely responsible for the conversion and that the impact is direct.
Impressions clicks conversion gross profit
CPM CPC CPA ROI
Calculation:
CPM = impression x cost CPC = total cpm/clicks. CPA = total cpm/number of conversions. ROI= profit per
conversion/total cpm
, Search Engine Advertising
Google is mostly used (>88%) in western countries.
Most search engines work the same; keywords results in search results. Search results can be divided in
‘sponsored’ search results (first result and right results) and ‘organic’ search results = free and based on their
relevance to the keywords. ‘Sponsored’ search results works on ‘Cost per Click’.
Why sponsored search section?
Most of attention is going to top search results
Top have the highest viewings.
Number 1 gets 30% of clickthrough, second 2 is 15%, third is 10% etc.
Scoring high on Google is thus of great importance. This can be reached by being very relevant; conducting by
Search Engine Optimization.
Search Engine Optimization
Search engines use algorithms to determine ranking of the search results; it is not publicly available (and change over
time) otherwise companies can influence their website and moreover, search engines advertising is part of search
engines profit. Known is what are components are important components.
How to optimize search engine?
Have unique content
Content should fit a (few) specific keywords on which it has to perform well
Optimize the technical side of the website; uptime, speed, no error, well-structured, up to date. Not? The website
seems not reliable and search engines would like to skip unreliable websites.
Make sure external sites link to you, including social media. Link accounts to your website because the search
engine recognize it as reliable. The more information about the company, the more it can be linked to relevance.
Monitor performance of the website on search engines, improve continuously, check what visitors are looking for
in order to improve search engines.
Search Engine Advertising, how does it works?
1. Select keywords you want to be included in for sponsored search results
2. Create an advertisement
3. Link to landing page
4. Bid on keywords; that is the maximal amount you want to pay for this.
How much to pay for a search ad?
1. Advertisers bid for certain keyword; the bids is the max willingness to pay.
2. Google uses a system called ‘second price auction’; advertisers don’t need to pay what they bid, but just enough to
outbid the position below them. Also counts for position 2 (they will pay a little bit more than position 3) etc.
3. The position and with that how much needed to be paid also depends on the Quality Score which is based on 1)
expected click through rate 2) the quality of the landing page and 3) the relevance of the ad. Less transparent
nowadays.
4. The bid, the quality score and ad’s format determine the Ad Rank Score. Even though advertisers play the highest
bid, the Ad Rank Score could avoid them for placing their ad based on their relevance etc. More formatting results in
more relevance.
5. The ad with the highest ad rank score gets the first position, the second highest gets second, etc. Ads below a certain
threshold won’t be shown
6. The amount advertisers need to pay just enough to maintain their rank
Typical cost per click
Different keywords lead to different costs. Keywords related to ‘Finance’ have high cost per click whereas ‘Shopping’
results in lower cost per clicks. Branded keywords (Amazon, eBay, Google) are relatively low in cost per click. This
all has to do with the amount of searches, how specific or broad the search is, how large the competition is and what
the potential revenue/profitability might be.
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