Long Form

To Internet and Beyond In Homage to Marketing: From www. to IoT

 

Philip Kotler surmised marketing as “the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit”. In continuation of the definition, he acknowledged the importance of segmentation, targeting, positioning, needs, wants, demand, offerings, brands, value and satisfaction, exchange, transactions, relationships and networks, marketing channels, supply chain, competition and the marketing environment in general. This Kotler statement of how marketers need to identify “unfulfilled needs and desires of the audiences” reflects in the Mad Men dialogue, “..what you call love was invented by guys like me, to sell nylons”, delivered by Don Draper.


Philip Kotler On Marketing
“Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services. Marketing is often performed by a department within the organization. This is both good and bad. It’s good because it unites a group of trained people who focus on the marketing task. It’s bad because marketing activities should not be carried out in a single department but they should be manifest in all the activities of the organization. In my 11th edition of Marketing Management, I describe the most important concepts of marketing in the first chapter. They are: segmentation, targeting, positioning, needs, wants, demand, offerings, brands, value and satisfaction, exchange, transactions, relationships and networks, marketing channels, supply chain, competition, the marketing environment, and marketing programs. These terms make up the working vocabulary of the marketing professional. Marketing’s key processes are: (1) opportunity identification, (2) new product development, (3) customer attraction, (4) customer retention and loyalty building, and (5) order fulfillment. A company that handles all of these processes well will normally enjoy success. But when a company fails at any one of these processes, it will not survive.”

It may not be entirely wrong to state that such an immense growth in digital marketing and advertising wasn’t expected when AT&T bought the first internet banner from HotWired in 1994. To promote their new campaign “You Will”, AT&T got Joe McCambley to design the said banner. The Copy for the first ever internet banner went something like this: “Have you ever clicked your mouse right HERE? YOU WILL!” This produced a CTR (Click Through Rate) of 44%. Even then, the use of clarity and simplicity to create curiosity was the sure-shot reason for success. This ad redirected audiences to a virtual tour of seven of the world’s greatest museums. This aimed at impressing the idea of time and space travel through Internet, specifically though AT&T. The ad bought at the price of $30,000 for a period of 3 months in 1994, may have hardly signalled how vast the industry would become. Now, forecasters predict that $674.24 billion ad spend dollars will be spent in 20201. It was 1994 when America Online introduced their web portal. Come 1995, Yahoo went from being a web directory to a commercial business, starting the first keyword-based advertisements. Netscape and Infoseek changed their advertising pricing model to CPM (Cost Per Mille). MSN Online was launched by Microsoft and the Internet Advertising Council assembled. Internet users started growing, multifold, globally. Banner ads started popping up everywhere and the standardization of ad sizes was being considered. This led to the first basic standard size being 468×60.

However, by 1996, CTR started dropping and banner ads were converting at only 0.1%. With companies still spending millions on banner ads without gaining adequate ROI, the industry started to dwindle. The flawed idea that reaching a larger consumer base would automatically mean higher profits was permeating throughout. Businesses focused on expanding their consumer reach instead of focusing on profit growth. This was the case with other industries as well. Investors were blindly investing in start-ups with unsustainable business models. This led to the famed dot-com-bubble burst. Tech stocks lost almost 60% of their value. NASDAQ composite decreased by 78%. The whole industry was affected and internet advertising revenue fell by 32% in mid-2000.


Case Study: WebConnect
When WebConnect, an ad agency placed banner ads for Encyclopedia – Brittanica, banner fatigue was surprisingly prevented. This was in 1996, when they were able to track impressions along with CTR. Unlike other agencies, WebConnect could place ads on any site that was the best fit for the ideal demographic. They had tools which helped capture the number of sales and inquires for each ad, a tool which helped place a frequency cap on the number of times an ad was visible to a user. This in turn cut down the banner fatigue.

1996 was also the year when Microsoft sponsored the Superbowl Website for $200,000. When Google launched its search engine in 1999, the online ad industry had already reached $1 billion in revenues. Pay Per Click ad model was adopted by Google in 2002 and it soon became a major source of revenue for all search engines. This was only the start – soon, Social Media would bring with it a bigger realm for marketers to explore and eventually, conquer.

Launch of Facebook saw the rise of a new vertical, Social Media Marketing. Designed at first to allow users to connect and network virtually, Facebook’s potential as a marketing tool was easy to notice. In 2004, when more than 7.3% of the global population started using the platform, domain and scale widened. In 2006, Facebook announced a marketing agreement with JP Morgan Chase for promotion of its Credit Card line of business.

Later in the same year, Facebook and Microsoft teamed up for advertising syndication, aiming to bring relevant ads to the 9 million Facebook users, then. Come 2007, Facebook gave an opt-out feature giving ad owners the ability to prevent their ad from showing to the wrong audience. A year later, Facebook launched “Facebook Ads for Businesses-Beacon”, which focused on viral brand messaging and engaging ads to capture user attention through viral and powerful, provocative messages. By 2009, advertisers were able to target demographics based on language, as well as location. Although Beacon was shut down by 2010, Social Context Metrics were introduced into Analytics. By 2011, Sponsored Stories and Ads API encouraged regular innovations to stay relevant to the dynamic consumer/buyer life cycle.


Case Study: DoubleClick
An online ad-service agency, DoubleClick brought some organization in ad buying-and-selling after its launch in 1996. DoubleCick found a way to track consumer behavior in the banner ads posted and made it easier to determine the success rate/ROI. Buy the year end, it developed DART – Dynamic Advertising Reporting and Targeting which aimed at helping advertisers track the clicks and optimize their ads while the campaign is ongoing. Revenue was achieved by brokering ads and offering premium analytical services to advertisers along with email marketing services. The price was based on Cost per thousand impressions (CPM) model.rs. The price for advertising on their network was based on Cost per thousand impressions (CPM) model. One of the few companies which survived the Dot com bust with around $900 Million in the bank.

 

 

While the technology behind Atlas (aQuantive) was purchased in 2007 by Microsoft for $6.2 billion, it was later acquired by Facebook for less than $100 million. With a net worth of around $350 billion2, revenue of 27.64 billion USD, 1.86 billion monthly active users and the purchase of Instagram for a billion dollars, Facebook played an instrumental role in creating the foundation for Social Media Marketing.

It wasn’t just Facebook though; Celebrity/Influencer Marketing got a kickstart 4 years after the launch of Twitter, when Kim Kardashian was (rumored to) being paid $10,000 per tweet through Ad.ly. With the launch of Promoted Trends and Tweets, Disney’s Toy Story 3 got recognized as the first paid trend. As of 2012, Twitter’s Mobile Ad revenue has exceeded Facebook’s.


Case Study: Round-up of PPC vs. PPM & Google vs. Yahoo + GoTo.com
Around 1998-99, PPC became an importance means of generating revenue for the search engine providers like AltaVista, Lycos, Infoseek, Yahoo and Google. Bill Gross invented a Paid Placement Model (PPM) for Goto.com (renamed Overture in 2001) and was acquired by Yahoo for $1.63 billion. While Google was struggling with PPC model, Yahoo offered its ad based on the PPC model since the beginning, in 1998. Later that year, it introduced the automated auction/bidding, where the ad would be ranked for a key term, based on how much the advertiser was willing to pay. The advertiser would pay Goto.com each time a user clicked on the ad. By mid 1998, people were paying as much as $1/click. The reasoning behind PPM was that the people who were willing to pay for top spots in general searches were more relevant and better websites. In 2001, GoTo.com renamed itself Overture. It allowed web portals like MSN and Yahoo to monetize their traffic. This proved to be highly profitable for both Overture and its partners. In fact, it even brought portals like AltaVista and AlltheWeb. In 2003, Overture was brought by Yahoo. In 2001, where Google made $85 million from its CPM based ad revenue, Overture earned $288 million selling ads on a PPM (Paid Placement Model – Overture’s version of PPC) basis. In 2002, Google revamped its Adwords program. It reintroduced Adwords which now included the option of PPC advertising. Google’s version of PPC was different from Overture’s PPM. Where Overture allowed its users to buy their way to the top, as in – the higher your bid, the higher your listing; Google understood the importance of relevance and better user experience. You see, any big company could buy their way to the top, but if the ad was not relevant then it would generate less clicks, the users who end up clicking will not get anything relevant to what they searched for and the company would make no profit either. For a more robust ranking mechanism, Google, as a means to measure an ad’s relevancy, introduced the “Click through rate” feature. This meant that if an ad with a lower bid got more clicks than the others above it, it would climb up the ranking ladder. A more sophisticated version is called the Quality Score today. Google did not invent the Pay per click model, but it simply adapted and perfected it. Today, almost 96% of Google’s revenue comes from advertising.

It’s a common knowledge that global mobile commerce is expected grow; from US$170 billion in 2016 to US$694 billion in 20193. This, clubbed with the constant emergence of multiple social media platforms and the rise of content consumption through mobile internet, brands have started to realize the need for the “clutter-breaking”.
One good example of the shift in the scale required to “make it big” would be Red Bull’s Stratos Jump with Felix Baumgartner. With this success, Red Bull managed to give its public image some wings. The stunt managed to garner more than 8 million views on the YouTube Live stream. Breaking through the boundaries of traditional marketing and sponsorship alike, Red Bull sparked a change in the way clients asked marketers for “something viral, something out of the box”.

Looking forward, the need for Content Marketing, Experiential Marketing, a clear and strong brand persona is essential for the survival of brands. With Programmatic and RTB (Real-Time Bidding) quickly paving way for technological autonomy and intelligent data analytics, the future signals the need for adaptability to innovations.

Talking about the future, industry giants have recognized the promise and need of AI in Advertising, for a seamless consumer experience. With around 18 major M&As in 2016, by contenders like Google, Twitter, Intel, Apple, and GE, the future looks intelligent. Google has been the most active player with as many as 200 acquisitions under its belt, the first being deja.com, an internet software and service (2001). With the flurry of AI for not just data solutions but also for IoT products, possibilities are huge. Products like Google Home, Amazon Echo, Apple HomeKit and Microsoft Azure are already creating buzz and despite scepticism towards security, the industry is expected to grow. In 2013, Heineken used smart technology for “Ignite”, limited stock of bottles which flashed in time with the music and it up every time they were clinked. Although it wasn’t successful in creating a big buzz, it gave an interesting insight – being courageous won’t be enough for brands, they have to think of scalability, as well. The recent Burger King – Google Home controversy signals the arrival of a more competitive future and further reinforces the prediction that AI and Marketing grounds will soon be intertwined. Regarding this, some vital questions pop up: Will IoT spearhead the industry towards singularity? Are the innovations yet to peak? That being said, it’d be intriguing to see how Brands prepare and combat the apparent and approaching paradigm shift.

 

Sources:
1 https://www.emarketer.com/Article/Worldwide-Ad-Spending-Growth-Revised-Downward/1013858
2 http://money.cnn.com/2016/04/28/investing/facebook-trillion-dollar-market-value/
3 https://www.statista.com/topics/779/mobile-internet/

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