Chapter 13 – Digital and Direct-Response Advertising*Virtually every advertiser is using the techniques of direct response as a key ingredient of marketing strategies. Digital Pros:1. A relatively inexpensive, quick, targeted, measurable, and easily available interactive medium2. A combination if interactive audio with video capabilities that can engage a customer3. Among the most flexible media with an ability to change messages immediately in reaction to market and competitive conditionsDigital Cons:1. Early failures made some advertisers cautious about exploring the unique possibilities offered vythis medium2. Some consumers are still reluctant to use the internet as a means of buying products and services; they are timid to give their credit card numbers over the internet even though secure sites are available3. There are so many websites that it makes it difficult for consumers to know what is available or have much time to spend with any single site. Direct Contact with ConsumersMarketers have moved towards a more personal relationship with their consumers. They have progressed steadily from mass marketing wherein prospects were reached relatively indiscriminately at the lowers possible CPM to:- Category marketing (broad demographic targeting . Ex: women aged 18-34)- Niche marketing (more narrow categories. Ex: women aged 18-34 with children)- Group or community marketing (groups with common interests. Ex: tennis players)While this was happening, the competitive market was reducing the distinction among its brands resulting in:1. Price competition with shrinking profit margins for sellers2. A reliance on trusted brands to provide customers with a perception if consistent qualityCustomer relationship marketing (CRM): a management concept that organizes a business according to the needs of the consumer. From the standpoint of customers, it is clear that the audience feels empowered by interactive media, and they use this empowerment in a proactive manner. Customers are also embracing online couponing, entering sweepstakes online, and participating in other targeted sales promotion activities. Customers respond to promotions tailored to their interests and businesses are happy to avoid the expense of waste circulation. Although CRM sacrifices some control to customers, there are 5 advantages:1. More effective cross-selling and upselling from current customers2. Higher customer retention and loyalty3. Higher customer profitability4. High response to marketing campaigns5. More effective investment of resourcesThe use of interactive technology allows businesses to deal with the unique purchasing, lifestyle, and behavioral histories of each customer – businesses now have the capability of one-to-one marketing. The end results are that the consumer gains better value and the company engenders continued customer loyalty. Advertising and Digital MediaIt is estimated that in 2009 almost 74% of the U.S. population – or more than 22 million citizens – use the Internet. There are five primary types of advertising in digital media: search, online display, email marketing, social media marketing, and mobile marketing.Search: search, or keyword advertising, dominates all forms of digital advertising. Marketers can bid through auction systems on words or phrases related to their offering – advertisers only pay the search engine a fee when consumers click on sponsored links. This is a viable option for small advertisers with limited budgets. Online display: the second-largest type of digital advertising - include banners, buttons, microbars, skyscrapers, etc. these ads can be static, animated, or contain video, but most contain the direct-response feature of a link to the advertiser. Click-through rate (CTR) is the traditional measure of successfor online display ads. CTR = number of clicks / number of times it is seen. CTR fails to consider a display ad’s influence on branding and other forms of marketing communication. Display ads are monetized in several ways, but cost-per-impression (CPM) still represents the industry norm – CPMs on ad networks range from $.60 to $1.10.Email marketing: “the rock star of direct marketing because it is the most cost-effective and most trackable.” Click-through is higher for consumer products and financial services. Marketers are moving from mass-emailings to much more targeted and personable approaches by using demographic data. New vocabulary for online marketers:- Spam: online advertising messages that are usually unsolicited by the recipient- Opt-in: a form of permission marketing in which online customers are sent messages only after they have established a relationship with a company. Only consumers who have granted permission are contacted. - Opt-Out: procedures that recipients use to notify advertisers that they no longer wish to receiveadvertising messages. A term usually associated with online promotions. Congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Act of 2003 which establishes requirements for those who send commercial email and gives consumers the right to ask e-mailers to stop spamming them. Social media marketing: includes blogs, social network sites, chat rooms, message boards, podcasts, andvideo and sharing sites. There are two primary ways to advertise on facebook: set up a profile page and actively enlist friends and fans to sign up, and then send bulletins about special events and discounts, ORcompanies can run traditional online display ads on member pages. They can target audiences based on the information facebook users provide on their profile. Advertisers on facebook can choose to pay-per-click or pay by the number of impressions generated. Video sharing sites like youtube are used by advertisers as well. The internet makes it possible for advertisers to run edgier and more consumer-produced content than they would be able to run in the broadcast media. Advertisers are finding ways to leverage the popularity of social media in such a way as to engage customers rather than making them feel as though the advertiser is invading their personal space. Mobile Marketing: advertisers see the potential in mobile but must tread carefully because research shows that consumers are annoyed by unwanted mobile solicitations. Smartphone apps are a marketer’s dream because advertisers can use mobile in creative ways to deliver value and advertising to users while