Dr. H. Ronald Moser Cumberland University

1. Kleppner’s Advertising Procedure Dr. H. Ronald Moser Cumberland University

2. Chapter 13 Digital and Direct-Response Advertising Kleppner’s Advertising Procedure, 18e Lane * King * Reichart

3. Learning Objectives – 1 • List the pros and cons of digital media for advertisers. • Describe the development of direct-response advertising. • Identify five advantages of customer relationship marketing. • Identify five primary types of advertising in digital media.

4. Learning Objectives – 2 • Describe four ways marketers can use commercial web sites. • List the pros and cons of direct-response marketing. • Identify three objectives of direct-response marketing. • Discuss three important features of direct response.

5. Learning Objectives – 3 • Explain the concept of database marketing. • Identify four types of direct-response marketing. • Describe the opportunities and challenges of direct mail.

6. Pros of Digital Media • Virtually every advertiser is using techniques learned from direct response as a key ingredient of marketing strategies. • List below are some pros and cons of Digital Media: • Relatively inexpensive, quick, targeted, measurable, and easily available interactive medium. • Combination of interactive audio and video capabilities. • Among the most flexible media with an ability to change messages immediately in reaction to market and competitive conditions.

7. Cons of Digital Media • Many early failures. • Consumers still reluctant to use internet for purchasing. • Oversaturation of web sites make clutter and fragmentation major problems. • Security regarding information provides.

8. Direct Contract with Consumers • There is nothing new about the concept of selling directly to consumers. Benjamin Franklin sold scientific books by mail in the 1740s, and more than 100 years ago, Montgomery Ward had a thriving mail-order business through its catalog (see Exhibit 13.1). • For the last 25 years, marketers have moved toward more personal relationships with customers, moving from marketing to broad demographic categories to the next phase of focusing on more narrowly defined Niche Marketing. • At the same time technology was changing marketing, the competitive environment was reducing distinctions among brands.

9. Direct Contract with Consumers – Customer Relationship Marketing • Customer Relationship Marketing (CRM) – Is a management concept that organizes a business according to the needs of the consumer. • Applying the CRM concept, a company using sophisticated software and the Internet could achieve higher customer loyalty and retention (see Exhibit 13.2).

10. EXHIBIT 13.2. Direct Contract with Consumers – Customer Relationship Marketing • EXHIBIT 13.2. Zippo and Rolling Stone are Co-Marketing to Create Social Space for Music Enthusiasts.

11. Advertising and Digital Media • Though out this course we have offered examples of ways in which the Internet and other forms of digital media have dramatically changed the way marketers and the media do business. • In this section, we will discuss the primary types of advertising opportunities on the Internet and mobile devices, including a look at ways it is being used by firms to promote products an d services. • Above all else, interactive technology has provided businesses with the capability of one-to-one marketing. • It is estimated that in 2009 almost 74 percent of the U.S. population—or more than 227 million citizens—use the Internet. • As you can see in Exhibit 13.3. the list of the largest Internet advertisers includes a range of marketers from financial institutions such as Bank of America. Exhibit 13.4. contains a list of the top agencies specializing in digital marketing.

12. Exhibit 13.3. Top 10 Display Advertisers – Advertising and Digital Media • Following list of the largest Internet advertisers includes a range of marketers from financial institutions:

13. Advertising and Digital Media – Types of Advertising in Digital Media • Following is a list of major forms of advertising in digital media and their proportion of 2010 expenditures: • Search. • Online Display. • E-Mail Marketing. • Social Media Marketing. • Mobile Marketing.

14. Advertising and Digital Media – Major Types of Digital Media • Following is a list of major forms of advertising in digital media and their proportion of 2010 expenditures:

15. Advertising and Digital Media – Types of Advertising in Digital Media – Search • Following is a list of major forms of advertising in digital media and their proportion of 2010 expenditures: • Search– Search, or keyword advertising, dominates all forms of digital advertising, and revenues are expected to double by 2015. • According to Advertising Age, in 2008, the top digital advertising agency was Digitas (see Exhibit 13.4). • Marketers, from global brands to local mon-and-pop businesses, can bid through auction systems on words or phrases related to their offering.

16. Exhibit 13.4. Top Digital Agencies – Advertising and Digital Media • Following contains a list of the top agencies specializing in digital marketing :

17. Advertising and Digital Media – Types of Advertising in Digital Media – Online Display • Following is a list of major forms of advertising in digital media and their proportion of 2010 expenditures: • Online Display– The second-largest type of digital advertising is online display. • Banners and buttons represent the vast majority of these ads, but many other formats also exist such as skyscrapers, full banners, and microbars. • These ads can be static, animated, or contain video, but most contain the direct-response features of a link to the advertiser (see Exhibit 13.5. and 13.6. in your text book).

18. Advertising and Digital Media – Types of Advertising in Digital Media – E-Mail Marketing • Following is a list of major forms of advertising in digital media and their proportion of 2010 expenditures: • E-Mail Marketing– E-mail remains an effective means of cultivating and maintaining relationships with prospects and customers. • With 2010 spending on e-mail marketing at $1.4 billon, it is an established means of online marketing, with newfound resurgence during the recent economic downturn. • Marketers are moving from mass e-mailing to much more targeted and personable approaches: “Enhancing e-mail lists with demographic data can improve performance.”

19. Advertising and Digital Media – Types of Advertising in Digital Media – E-Mail Marketing • In addition to enhancing performance, marketers are facing a number of concerns about how and under what circumstances they can contact a person online. The debates have created a new vocabulary for online marketers: • Spam–Refers to unsolicited and usually unwanted online advertisements or promotional messages. • Opt-in–Is a form of permission marketing in which online customers are sent messages only after they have established a relationship with a company. • Opt-out–Is a mechanism by which customers can notify online promoters that they do not want to receive spam. Home Office

20. Advertising and Digital Media – Self-Regulatory Guidelines for E-mail Marketing – 1 • Use an honest subject line. • Include a valid return e-mail address as well as a physical address for those who wish to contact the company. • Clearly identify the subject and the sender at the beginning of the e-mail. • Provide a clear and conspicuous e-mail option for consumers to remove themselves from the list.

21. Advertising and Digital Media – Self-Regulatory Guidelines for E-mail Marketing – 2 • Ensure that electronic name-removal features are prompt and reliable. • Offer options for removal of consumers from commercial e-mail lists for each brand or product featured. • Don’t acquire e-mail address through automated systems (i.e., spiders and robots) without the consent of the consumer.

22. Advertising and Digital Media – Self-Regulatory Guidelines for E-mail Marketing – 3 • Do not provide e-mail lists to unrelated third parties for their use. • Provide the sender’s privacy policy in the body of the e-mail or via a link. • Ethical e-mail marketers are advocating that they be allowed to send mass online messages with the proviso that consumers can then opt-out of future communication.

23. Advertising and Digital Media – Types of Advertising in Digital Media – Social Media • Social Media – Include blogs, social network sites, chat rooms, message boards, podcasts, and video and photo sharing sites (see Exhibit 13.7. in your text book). • Facebook and MySpace –Are the largest social networking sites. • LinkedIn and Twitter – Are other social media sites generating attention? Twitter was originally developed as a way for people to follow friends. However, marketers are using it to create a following for their brands and to enhance customer service.

24. Advertising and Digital Media – Types of Advertising in Digital Media – Mobile Marketing • Mobile Marketing – Include blogs, social network sites, chat rooms, message boards, podcasts, and video and photo sharing sites (see Exhibit 13.7. in your text book). • While advertisers recognize the potential in Mobile Marketing, the number one drawback is consumers’ negative reaction to unwanted solicitations.

25. Digital as a Complement to Other Media • For most media categories, including other direct-response media, digital advertising can stand alone but more often serves a complementary role in integrated campaigns. • Television seems to work well with online messages. The medium’s high credibility can build brand equity among large groups of prospects very quickly. • When NBC began an online-only series, Star Tomorrow, it was trying to creatively use the Internet and cross-media deals to attract advertisers. • According to some research, the major challenge for online promoters is to overcome the online user’s impatience. • Because the sheer number of online options can make users impatient, there is a heightened need for companies to pay even more attention to branding.

26. The Role of Digital Media and Marketing • From an advertising and marketing perspective, there are a number of uses for the Internet and commercial web sites: • A Source of Direct Sales. • A Source of Advertising-Supported Communication. • Source of Marketing and Promotion Information. • Builders of Consumer Engagement.

27. The Role of Digital Media and Marketing • From an advertising and marketing perspective, there are a number of uses for the Internet and commercial web sites: • A Source of Direct Sales– Internet direct sales may be accomplished as stand-alone e-businesses, such as Amazon.com, or as an ancillary to an established business. • A Source of Advertising-Supported Communication – Virtually every magazine, newspaper, and major broadcast outline has some Internet presence.

28. The Role of Digital Media and Marketing • From an advertising and marketing perspective, there are a number of uses for the internet and commercial web sites: • Source of Marketing and Promotion Information – Thousands of businesses large and small have established web sites to provide product information, enhance stockholder relations, and report current company news. • Builders of Consumer Engagement – Increasingly, advertisers are finding ways to engage consumers when they visit the advertisers’ web sites in an attempt to help build connections and encourage consumers to regularly visit the site.

29. Digital Media and Marketing Research – Some Generalizations • Internet marketing enjoys the benefit claimed by no other media that the ability to collect market research more quickly and inexpensively, even on a global basis, than with conventional research methods. • These data are, of course, collected as part of the consumer search and transaction process (see Exhibit 13.10). • The Internet allows marketers to reach samples of specific consumers to determine a number of product, marketing, or advertising responses. • Instead on being confined to a few locales, a marketer can now sample globally.

30. Exhibit 13.10. Common Metrics for Success in Search Marketing • EXHIBIT 13.10. Many marketers use the Internet’s ability to measure performance. This table presents the most common metrics for measuring the success of search marketing.

31. Digital Media and Marketing Research – Elements of Online Privacy Policies • In response to growing public concerns, the FTC has launched a number of inquiries about online policies and practices. • The FTC advocates four elements for online privacy policies: • Disclosure of what information is collected. • Choice for customers to opt-out. • Access by consumers to their personal information. • Security standards for information use and access. • Consumers are likely to feel more comfortable doing business with companies that have good consumer privacy policies.

32. Digital Branding, Audience, and Internet Dayparts –Youth Audiences • The Internet is instant, intrusive, and international, It is a medium with no boundaries, consequently, it presents a challenge to international advertisers. • Advantages for international companies that use the Internet globally include the following: • Ease of receiving orders from consumers worldwide without incurring extra expenses. • Ease of providing information about their products in other countries without incurring extra expenses. • For academic institutions, save on materials and mailing costs because application materials can be put online. • Option to advertise on search engines like Google or Yahoo! or pay to receive favorable placement. • Youth audiences spend more time using the Internet than watching television. • Research indicates that 13-to 24-year-olds spend more time online than on traditional media.

33. Digital Branding, Audience, and Internet Dayparts • As with radio and television, there appear to be distinctive daypart usage patterns on the Internet. According to a study conducted by the Online Publishers Association there are five distinct Internet dayparts: • Early morning (Monday–Friday, 6 A.M.–8 A.M.). • Daytime (Monday–Friday, 8 A.M.–5 P.M.). • Evening (Monday–Friday, 5 P.M.–11 P.M.). • Late night (Monday–Friday, 11 P.M.–6 A.M.). • Weekends (Saturday–Sunday, all day). • To reach consumers under the age of 18, you might want to place your Internet advertising during evenings and weekends.

34. Forms of Direct Response • Listed below are difference forms of direct responses to Internet advertising: • Television and direct-response marketing. • Television shopping networks. • Radio and direct response. • Magazines and direct response. • Catalogs. SEE ROCK CITY

35. Direct Response Pros and Cons – Pros of Direct Response • In this section we discuss some of the pros and cons of direct response marketing. • Potential to reach any prospect on a geographical, product usage, or demographic basis. • Measurable medium with opportunities for sales-related response. • Personalization and relationship-building possible.

36. Direct Response Pros and Cons – Cons of Direct Response • In this section we discuss some of the pros and cons of direct response marketing. • High cost per contact. • Updating lists can be challenging. • Privacy issues are an increasing concern. • Difficulty in personalizing messages.

37. Direct-Response Marketing: An Overview – Objectives of Direct Response • Most direct-response campaigns have at least one of the following objectives: Direct Orders Lead Generation Traffic Generation

38. Direct-Response Marketing: An Overview – Objectives of Direct Response • Most direct-response campaigns have at least one of the following objectives: • Direct Orders – Direct Order includes all direct-response advertising that is designed to solicit and close a sale.

39. Direct-Response Marketing: An Overview – Objectives of Direct Response • Most direct-response campaigns have at least one of the following objectives: • Lead Generation – Lead Generation includes all direct-response advertising that is designed to generate interest in a product and provide a prospective buyer with a means to request additional information about an item or to qualify as a sales lead for future follow-up.

40. Direct-Response Marketing: An Overview – Objectives of Direct Response • Most direct-response campaigns have at least one of the following objectives: • Traffic Generation – Traffic Generation include all direct-response advertising conducted to motivate buyers to visit a business to make a purchase.

41. Exhibit 13.12. – Features of Direct Response • A properly executed direct-response campaign will reach a significantly higher percentage of prospects with much less waste circulation than advertising. • EXHIBIT 13.12. Creative Executions Directed to Target Prospects Enhance Response Rates.

42. Direct-Response Marketing: An Overview – Features of Direct Response • Regardless of the means of reaching consumers with direct-response offers, there are a number of characteristics that these approaches have in common: • Direct Response is Targeted Communication. • Direct Response is Measurable. • The Message of Direct Response is Personal.

43. Direct-Response Marketing: An Overview – Features of Direct Response • Regardless of the means of reaching consumers with direct-response offers, there are a number of characteristics that these approaches have in common: • Direct Response is Targeted Communication – The copy or message can be tailored to the demographic, psychographic, and/or consumption profile of the audience.

44. Direct-Response Marketing: An Overview – Features of Direct Response • Regardless of the means of reaching consumers with direct-response offers, there are a number of characteristics that these approaches have in common: • Direct Response is Measurable – One of the disadvantages of most traditional advertising is that only the results can be estimated. However, in many forms of direct response the results scan be calculated to the penny.

45. Direct-Response Marketing: An Overview – Features of Direct Response • Regardless of the means of reaching consumers with direct-response offers, there are a number of characteristics that these approaches have in common: • The Message of Direct Response is Personal – Whether by mail, media, or computer, the direct-response markerter is able to identify consumers better than even and reach them with targeted, personalized messages.

46. Database Marketing – Some Generalizations • Advertising is usually used as one step in the process of building awareness and brand equity that could lead to a future sale, whereas direct response’s main purpose is to make the customer fully aware of a service or product. • The key to successful direct response is a thorough knowledge of the customer. • This information includes not only consumers’ demographic characteristics but also their purchase behavior, their interests, and lifestyle. • The primary consideration of database marketing involves using information to predict future purchases of the consumer and provide information that allows a company to maintain customer loyalty and profitability.

47. The Direct-Response Industry – Some Generalizations • The direct-response advertising industry has grown dramatically in the past 25 years, and the growth is likely to continue. • This growth was fueled in part by Internet advertising; however, there are many other forms of direct response including catalogs, inserts, coupons, direct television and radio, and direct mail. • Exhibit 13.13. lists the leading agencies specializing in direct marketing.

48. Exhibit 13.13. Top Direct Marketing Agencies • EXHIBIT 13.13. lists the top 10 Direct Marketing Agencies:

49. The Direct-Response Industry – Television and Direct-Response Marketing • The most used forms of DRTV are the following: • 800-series numbers and/or Internet ordering. • The traditional 30-second format with a tagline containing ordering information. • The 2- or 3-minute commercial. • Program-length infomercials featuring well-known personalities, slick production, and blanket coverage during specific dayparts.

50. The Direct-Response Industry – Television and Direct-Response Marketing • The most used forms of DRTV are the following: • 800-series numbers and/or Internet ordering – Like all television advertising, direct response has the advantage of sight, sound, and motion, coupled with toll-free 800 numbers and/or Internet ordering capability to make it a seamless sales process.