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[FINAL] The Effects of Digital Marketing on the Advertising Industry

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1 | P a g e
The Effects of Digital Marketing on the
Advertising Industry
A Report by Andy Baker
2 | P a g e
Table of Contents
Page 3-4 – Introduction and A History of Digital Marketing
Page 4-5 – Advantages of Digital ...
3 | P a g e
Newspapers and magazines began to sell advertising space in 1880, making way for the
first forms of advertisem...
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[FINAL] The Effects of Digital Marketing on the Advertising Industry

  1. 1. 1 | P a g e The Effects of Digital Marketing on the Advertising Industry A Report by Andy Baker
  2. 2. 2 | P a g e Table of Contents Page 3-4 – Introduction and A History of Digital Marketing Page 4-5 – Advantages of Digital Mediums Page 5 – Advantages of Traditional Mediums Page 5 – Disadvantages of Digital and Traditional Mediums Page 6 – Integrated Marketing Techniques Page 7-9 – Digital Marketing Trends Moving Forward in 2014 Page 9-10 – Moving Forward and Conclusion
  3. 3. 3 | P a g e Newspapers and magazines began to sell advertising space in 1880, making way for the first forms of advertisement. Movies were produced in the 1910s, allowing movie theater advertising to become a medium to reach consumers. Radio began employing advertising in the 1920s. Televisions were not an advertisement medium until 1945 (Pakman, 2005). Digital marketing began with the Web 1.0 revolution started by the Internet in the 1990s. 1993 gave way to the first banner ads on websites, which sparked the digital marketing revolution. Shortly after in 1996, the Internet gained new technology which gave birth to the phenomenon of search engines and social networking sites. Specifically, Google was brought into the fold, which paved the way for improvements in internet search engines. After a couple of years of operation, Google eventually incorporated AdWords and AdSense to increase their marketing potential and reach. The first cookie followed and marked the beginning of the tracking of user browsing history. Each of these phenomena on their own may not seem like much, but put them together and you have the foundations for the Web 2.0—the Digital Era. The Internet is not a new concept. It has existed since the early 1970s, however it was not commissioned for commercialized use until the late 1980s. Dan Lynch first presented the concept and what it could do for companies in 1985 at a three day workshop with the Internet Architecture Board (IAB). Lynch’s workshop helped spark a decade-long discussion about the use and practicality of such technology in not only the workplace, but for the personal use of consumers as well. The Internet started becoming available commercially around 1991-92, but did not get a formal definition until October 24, 1995, when the Federal Networking Council voted to give it a formal definition. The agreed upon definition of the Internet is quite extensive, so in Layman’s terms it can be defined as the first globally linked information system. Finally, the world welcomed Web 1.0 into the world (Leiner, 1996). Web 1.0 brought with it a whole new realm of possibilities and excitement. Companies slowly began to embrace the idea and started to place their own websites online for consumers to browse. One website in particular, HotWired, can be credited for the birth of advertising on the Internet, specifically in the form of banner advertisements. On October 27, 1994, HotWired ran banner ads on their website from fourteen different companies, among them Volvo and AT&T. This date can be viewed as the unofficial beginning of digital advertisement on the Internet (Singel, 2012). Search engines were the next objective after banner ads. Search engines had existed since 1990, but it was not until 1994 that search engines brought results in real time and were available to everyone. This web innovation gave rise to the idea that companies could track what users searched for, and from keywords within the search could target specific advertisements to consumers. Yahoo! Search was one of the first implementers of this technology, but it wasn’t until two years later, in 1996 when it was utilized by newly-created Google Search, that it came to be an integral part of the digital marketing strategy for most companies. Google had the art down to a science and implemented one of the best systems for
  4. 4. 4 | P a g e targeted marketing, which is why it is today a global conglomerate in technology and innovation markets (Kim, 2010). A major factor in Google’s success was its use of ‘cookies’. Traditionally, a cookie in the technology sense is a piece of data held by an intermediary party (Internet Cookies, 2012). By using cookies, Google could track the search histories of users and could provide the end user with a more personalized experience that can better help them find what they are looking for. This concept is now huge in helping provide a customized, more personal web experience for users. The combination of each of these items has helped shape digital marketing and the Web 2.0 into what it is today. These bricks are the steady foundation upon which innovations in digital marketing have been constantly built on for the past twenty years, and while there is quite a bit piled on top of the foundation today, these pieces are still there to help keep Google atop the search engine marketplace and to allow Facebook to advertise to you based on your interests. With the abundance of creative possibilities available on the Internet, and the decline of the print and radio industries in modern culture, all signs point to digital marketing becoming the new generation of ‘traditional’ media (Marketing Technology for Growth, 2012). There are so many more ways to reach people on the Internet than with traditional mediums, and it is essentially cheaper too. A marketer doesn’t have to worry about printing costs and distribution costs when advertising online (Faulkner, 2013). This is a huge advantage as marketers can allocate more of their time and money towards digital mediums, which are very cost-efficient and reach a larger audience. A company can literally target the world if they wanted to, as a single online campaign put into practice effectively can be found by anyone in any location (Faulkner, 2013). With traditional media, there is a lot more research that has to be performed before marketers can choose the best mediums to use to reach their target audience. Factors such as population, age, and even weather need to be taken into consideration before deciding to target a product to a specific group of people. This adds to the cost and additionally the hassle involved in marketing through traditional media. Another advantage to digital media over traditional is the fact that it is not very intrusive (Faulkner, 2013). Most mediums, especially television, are obnoxious and drive consumers to the point of frustration at times. This is a negative for any product with a commercial on TV that has this effect on consumers. Not only is the exposed consumer frustrated or ‘put-off’ by the advertisement, but now he or she has a perception of the brand that they will be more than willing to pass on to friends and other consumers. This has the potential to start a negative snowball effect for the product in question and can severely hurt sales due to negative word-of- mouth started by traditional mediums. Digital outranks traditional mediums in measurement and engagement as well. Through digital social sharing sites such as Facebook and Pinterest, consumers can share interesting content about new products or can invite friends to join them in a sweepstakes contest giving
  5. 5. 5 | P a g e away a free or discounted product. This kind of buzz marketing excites consumers and gets them engaged with the brand, which is a huge strength of advertising digitally (Faulkner, 2013). Before digital mediums came about, consumers would use face-to-face interaction to implement word-of-mouth sharing over TV, newspaper, and radio advertisements. This was the only way that consumers could ‘share’ close to twenty years ago. Brands had to hope that they had created something original that could stand out from the clutter of these traditional mediums and could be spread through the grapevine by consumers. Now, digital sites allow users to share content with fellow consumers by simply clicking a button. This paved the way for greater levels of interaction between the consumer and the brand, sparking an engagement factor that never existed before digital. Consumers can now interact with brands one-on-one and provide instant feedback, which is invaluable to companies who are constantly innovating. While digital mediums provide heighted senses of interaction and engagement with brands and their consumers, traditional media should not be left in the dust completely. Traditional mediums are still widely popular today, chief among them being television and radio (Higuera, 2014). Many households still own a television set (96.7% of American households as of 2011), and the phenomenon of Internet radio sites such as Pandora and Spotify is just beginning to take off (Stelter, 2011). While yes, Internet radio is technically a digital medium, it still falls under a traditional mindset during the creation process. Many more people are apt to trust traditional mediums as they have been around longer than digital methods, causing them to be viewed as more trustworthy (Higuera, 2014). Also, more people have easier access to traditional mediums over digital options. It is easy to access a newspaper due to cheap costs, and televisions are being placed in more locations outside of the home anymore that it is hard to find a location without one. While this is great for exposure, this leads back to the intrusion factor of traditional media. Some individuals may not be too keen on having Nicki Minaj advertising for Pepsi on a TV screen right over their shoulder in a public restaurant. In terms of creativity, both traditional and digital mediums serve as hotspots for the most talented minds in the industry. Through television, advertisers are able to provide a ‘Show-and-Tell’ effect which essentially does exactly as the namesake suggests: the audience is show a product and is then either told or shown through demonstration how the product works (AllBusiness.com, 2014). This is never as easy as it seems however, and it usually takes brilliant creative to break through the clutter that is clogging the pores of traditional avenues. Good copywriters for TV scripts are few and far between in today’s mainstream culture, making advertisements come across as cheap and outdated (AllBusiness.com, 2014). It is also hard to stand apart visually on TV. Many ideas have been done, and are consistently repeated each day. Creatives have an easier time creating sharing campaigns and hashtag campaigns as these concepts are relatively new and the idea possibilities are still being explored. It is also easier to engage with consumers through social media and brand interaction campaigns. Consumers like to have a personal connection with a brand, and social media allows for that interaction to take
  6. 6. 6 | P a g e place. TV certainly has the potential to make this connection as well, but needs a little bit of help to make it happen. Integrated marketing techniques are being highly integrated into today’s marketing strategies. Brands need to be more of a presence online if they want to be relevant in the mainstream market. However, companies cannot overlook the benefits traditional media still present marketers today if they are integrated with online strategies. With roughly 96.7% of households having a TV, marketers need to make sure that they tap into that market to get maximum exposure for their brand. By advertising with a 30 second spot on television and then promoting a hashtag or other social media campaign at the conclusion of it, marketers can make sure that they hit all aspects of what makes a good integrated campaign today (Severson, 2013). In order to make sure that an integrated campaign is executed to perfection, each of its parts must be moving in the same direction. By that, I mean that both the traditional campaign and the social media movement (or call-to-action) for the same campaign have to correlate and must be able to be easily recognized across either medium as the same campaign. By ensuring that the content of the site is updated regularly and by providing consumers engagement, a company can implement a flawless integrated campaign (Severson, 2013). Digital marketing has already delivered some great campaigns and exposure for many companies, some whom have been around for generations. A great example of a social media campaign that did really well in 2013 is Dove’s Real Beauty Campaign. In this campaign, Dove Company had professional forensics artists draw faces of women while they described themselves (Cassinelli, 2013). The forensics artists were of course blind to the subject they were instructed to sketch. Upon finishing the sketch, the artists would ask a stranger to come into the room and describe the same women. This campaign sparked a lot of conversation amongst consumers as it had the power to both convey the inner beauty within each woman, but also was able to justify the importance of physical beauty in today’s society (Cassinelli, 2013). The campaign had over 114 million viewers, making it the most viral video advertisement to date (Cassinelli, 2013). What Dove did well was integrate. Not only did they integrate their TV spots onto social media sites to integrate the campaign, but they also had real women take part in their ‘drawing experiment’. This shows that Dove cares about their customers and is willing to go out of their way to be caring towards consumers concerns and needs. This is huge for any brand in today’s ever-digital market. By being able to reach out to consumers and directly ask what they would like to see from a product, they can create more value that can be shown in their products and the brand image. Many more companies will be taking after Dove’s example last year and will be stepping up their game to bring the most innovative social media idea to the forefront of everyone’s mind in 2014. We saw the digital marketing creative avenues explode from 2012 to 2013, and
  7. 7. 7 | P a g e one can only wonder what the transition from 2013 to 2014 will bring. Many predictions are being made as to what we will see in the next year as far as digital advertising trends. Many of these trends are right on par with some of the creative work we are seeing currently. However, new innovations in technology and logistics allow marketers to pick and choose from a wider range of options to reach consumers. In 2014, expect to see a lot of ingenuity in the mobile advertising market. Search engine marketing will be one of the major players in the mobile market this upcoming year. In 2014 alone, experts expect search engine traffic to come from a mobile device 35% of the time, while mobile search advertising in general is expected to jump by 76%. Search engine optimization (SEO)—the act of a company making their webpage search engine friendly (able to be more easily targeted through quality website maintenance)—and search engine marketing (SEM)— the act of doing anything to get a webpage higher on search engine sites—will be more optimized for mobile devices in 2014 and will be able to offer more great options for advertisers to reach consumers (Karr, 2014). As far as social sharing sites such as Facebook and Pinterest are concerned, content will need to be more eye-catching and will need to break through the already-mounting clutter of content advertising already in play. To do this, companies must have content that houses videos, customized content, and stunning visual content in the form of photos and more videos. Videos within posts statistically attract three times more clicks than do regular text posts. Custom content has been a growing fad in the past few years and is slated to make a big run in 2014. Everyone wants to feel that they are able to have an interaction with a brand, and by running customizable content, brands are able to provide just such an experience. The use of photos and videos to attract attention has been known for a while, and is predicted to once again be a key part of success on social sharing sites, especially Pinterest which is the most prevalent photo and video sharing site (Karr, 2014). Email marketing has been around since the early days of the Internet. It is not a huge medium for advertisers much these days due to the high clutter rates and people using SPAM mailboxes to automatically take care of ‘pesky’ advertisements. However, email marketing still plays a major role in business to business marketing. According to Douglas Karr’s marketing trends infographic, businesses will use email marketing 47% more in 2014 in order to reach out to other companies for business. That being said, not all consumer-based email marketing is dead. Many more emails come preloaded with content-sharing buttons that will automatically link consumers to their favorite social sharing site in order to advertise new things about a brand or product that is coming out in the future. This helps boost the click through rate (CTR) for companies who are trying to get more people to share their content on social sites. In fact, it is predicted that in 2014 CTR will increase approximately 150% for companies who include social sharing buttons in their emails. This will be huge for the 77% of consumers who are receptive to email blasts (Karr, 2014).
  8. 8. 8 | P a g e Social media will again be a huge player in 2014 for most companies who are relevant in today’s business world. Nearly 100% of all business decision-makers implement social media into their work routine in order to gain a more reliable estimation about market trends and consumer needs and wants. Social media also acts as a great relationship building tool for consumers and businesses alike. Consumers can actively learn about new products and can give feedback about current offerings that they may not have heard of otherwise. For companies who are invested in reaching out to other businesses, they must have a social media campaign in place. Many businesses network to each other over social sites such as LinkedIn, Twitter, and Facebook. By having an active presence on each of these mediums, businesses have a higher chance of finding interested clients (Karr, 2014). Social media is also a great way to engage consumers through the use of promotions and discounts. These discounts can be given to a consumer if they ‘like’ or share content that is related to the brand offering the discounts. Offering incentives is a very effective way to obtain headway in the digital realm, and more companies are starting to do it more and more, especially in 2013. This growth in the past year helps to shape the prediction for 2014, in which discounts and other incentives on social media platforms are expected to take off and clog the pores of the social sharing market. While some companies may not like the idea of offering an incentive to gain a good customer base, it is hard to argue against the fact that they do work and consumers are very receptive to companies who offer them (Thompson, 2014). Social media can be tricky though, and companies must have protocols in place to prevent against negative reactions to their brands and overall image (Sandilands, 2014). In a recent incident in 2013, a Manhattan, Kansas woman named Meagan May was fired for a belligerent post on Facebook in which she criticized the United States Military. Carmike Cinemas, her employer at the time, was very adamant that they had no involvement whatsoever in the comments May posted. However, Carmike will always be associated with ‘that one woman’ who made an ignorant comment on a social sharing site (Mabry, 2013). In addition to these enhancements to the already stable digital mediums, there will be opportunities for new levels of interaction between consumers and brands. An exciting new trend to look for in 2014 will be interactive video displays. These types of displays allow consumers to interact with a screen that has some connection to a brand. I recently saw an example in the Seattle Tacoma International Airport of just such a phenomenon. On the way to grab some food between flights, I noticed a huge display of connected monitors that had a matching game displayed on it. There were about twenty squares in total (it was an impressive display) and each had a piece on it that the person interacting with could touch and reveal like a normal matching game. The game was sponsored by a hotel company in Washington and had matching pieces that corresponded to things that one might associate with hotels, such as pillows or a pool. It was a great interaction tactic and was able to attract a large amount of people, generating huge exposure for the company (Burciaga, 2014).
  9. 9. 9 | P a g e Another innovation that is starting to become mainstream and began with video game consoles is the idea of cross-screen marketing. To make sure that everyone is accounted for and can be reached, it is crucial that companies focus their efforts on making campaigns integrated across all platforms. This way, consumers who do not have a smartphone can still be exposed to the same media through TV, tablets, desktops, or, as previously stated, interactive video screens. This increases market share for a company and the amount of exposure that they are able to garner in the market (Burciaga, 2014). 2014 will also see the implementation of location-based marketing. Data collection services on mobile devices and across search engine platforms allow marketers to gain a truer perspective into the type of consumer they are dealing with. This gives marketers the tools they need to create a campaign tailored specifically to each individual consumer, once again providing company-consumer interaction that is crucial in customer retention and relationship building. While this tactic is very useful to the marketers who employ it, data collection is a controversial topic among target consumers. Many individuals lobby against the use of data collection as it invades on their privacy and personal agendas. There is no way to argue the fact that data collection is indeed intrusive as it collects data we plug into browsers, texts, emails, calendars, and any other application that stores valuable data about a consumer’s demo- and psycho-graphics. However, recent events have led to the implication of tighter restrictions on what types of data can be collected and for which purposes. This has led to increased receptivity of data collection amongst consumers, and many thoroughly enjoy having marketing that is personalized for them. It helps consumers find what they are after faster and also introduces them to new products that they could be interested in purchasing (Burciaga, 2014). Digital marketing has made big strides since its incarnation in 1993 with the introduction of the banner ad. Since 2010 alone the economy has seen astronomical growth in technology innovation and the content of social sharing sites. Moving forward into 2014, there is even more to look forward to. Data collections will have major implications on the future of SEO and SEM in digital marketing. Data colleting gives real-time updates on a consumer’s behaviors and habits, almost eliminating the need for SEO and SEM as advertisers can directly target advertising that fits each consumer’s needs and personality type. Depending on whether consumers continue to slowly embrace data collection or not, we may not see SEO or SEM tactics anymore in digital marketing strategies within the next five years (Marketing Technology for Growth, 2012). Content marketing will also become a major cornerstone in the thinking of any good creative mind. Content needs to be strategic enough to stand apart from the competition, while not going overboard and luring customers away. Viral videos are a huge staple of any company looking to gain exposure in the marketplace. Videos are very engaging on social media sites and have a very high chance of being shared. This viral sharing of videos is essentially free word-of- mouth advertising for companies. Due to this, look for more companies within the next three to
  10. 10. 10 | P a g e five years to implement some sort of viral video marketing strategy. These strategies don’t always catch on, but when they do they spread like wildfire and can help gain a large portion of the market share. Cross-screen marketing and interactive video displays will also be used much more within the next three years. Already, these types of advertisement are being shown at places such as the Seattle Tacoma International Airport. Anything interactive will attract attention when it is located at an area where there is some type of layover or wait, like a subway or airport. People need something to do while they wait, and an interactive billboard will capture their attention very quickly. Cross-screen marketing will be very interesting to watch in the future. By having connectivity and one, flawless campaign run on each medium, no consumer will be left out and companies can increase the amount of exposure they have in the market. Traditional media has been overtaken in today’s market by the thrill and extravagance of the digital marketing world. There are so many opportunities to be creative with social media through promotions and hashtag campaigns, but it is also important to remember the content moving forward. Content is key and it needs to be engaging and creative in order to be dominant in the social sharing market. Not all traditional media is lost, however. As long as companies can maintain a good integration of both types of mediums—traditional and digital— then they will be well received by the public and will gain a larger portion of the market due to that newfound favorability. There is a lot to look forward to in 2014 as far as digital media goes. Interactive video displays and cross-screen open the doors for whole new realms of possibilities. In five years, mobile devices could link with interactive advertisements around towns and in public places such as airports and subways. In twenty years, virtual reality could be a new way to interact with consumers. In one hundred years…it is hard to say what the future will be like that far ahead. Digital marketing is expanding though, and it is important to look out for new trends and more importantly, start them. The only way to stand out is to be different and to be creative; digital marketing is the perfect platform for that and will be integral in the future of the advertising industry.
  11. 11. 11 | P a g e Bibliography A History of Digital Marketing. (2012). Retrieved from Digital Marketing Strategies: http://digital-marketing-strategy.weebly.com/history-of-digital-marketing.html AllBusiness.com. (2014). Television Advertising Pros and Cons. Retrieved from allBusiness: http://www.allbusiness.com/small-business-tv-advertising/15583543-2.html Burciago, G. (2014, January 28). Four Digital Marketing Trends to Watch in 2014. Retrieved from Marketing Profs: http://www.marketingprofs.com/opininos/2014/24242/four- digital-marketing-trends-to-watch-in-2014 Cassinelli, A. (2013, December 31). 13 Best Social Media Campaigns of 2013. Retrieved from Postano: http://www.postano.com/blog/13-best-social-media-campaigns-of-2013 DeVault, G. (2014). Traditional Versus Digital Advertising. Retrieved from About.com: http://marketingresearch.about.com/od/market.research.advertising/a/Traditional-Versus- Digital-Advertising.htm Digital Marketing Strategy - Home. (2014). Retrieved from Digital Marketing Strategy: http://digitalmarketingstrategy.com/ Dreyer, D. (2008, November 25). What is CTR (Click Through Rate)? Retrieved from Ezine Articles: http://ezinearticles.com/?What-is-CTR-(Click-Through-Rate)?&id=1728303 Faulkner, R. (2013, July 4). 10 Benefits of Digital Marketing v. Traditional Marketing. Retrieved from businessZone: http://www.businesszone.co.uk/blogs/robbo75/totally-digital- marketing/10-benefits-digital-marketing-v-traditional-marketing Higuera, V. (2014). Advantages & Disadvantages of Traditional Marketing. Retrieved from Small Business Chron: http://smallbusiness.chron.com/advantages-disadvantages- traditional-marketing-25573.html Integrated Digital Marketing: The Basics. (2013, February 18). Retrieved from SocialMediaToday: http://socialmediatoday.com/fionuh/1245316/integrated-digital- marketing-basics Integrated Digital Solutions. (2014). Retrieved from iDigital Strategies: http://www.idigitalstrategies.com/ Internet Cookies. (2012). Retrieved from Surf the Internet Safely: http://surfthenetsafely.com/surfsafely5.htm Karr, D. (2014, January 5). Infographic: Digital Marketing Trends & Predictions for 2014. Retrieved from Marketing TechBlog: http://www.marketingtechblog.com/digital- marketing-predictions-2014/
  12. 12. 12 | P a g e Killen, O. (2013, September 19). Traditional vs Digital. Retrieved from Digital Marketing Planet: http://digitalmarketingplanet.wordpress.com/tag/traditional-marketing-vs-digital- marketing/ Kim, L. (2010). The History of Search Engines - An Infographic. Retrieved from WordStream: http://www.wordstream.com/articles/internet-search-engines-history Leiner, B. (1996). Brief History of the Internet. Retrieved from The Internet Society: http://www.internetsociety.org/internet/what-internet/history-internet/brief-history- internet Mabry, J. (2013, September 26). Manhattan Woman Loses Job Over Facebook Post. Retrieved from wibw.com: http://www.wibw.com/home/headlines/Manhattan-Woman-Loses-Job- Over-Facebook-Post-225354712.html Marketing Technology for Growth. (2012, December 6). Retrieved from Synecore: http://engage.synecoretech.com/marketing-technology-for-growth/bid/166506/2013-The- Year-of-Integrated-Digital-Marketing Pakman, D. (2005, February 20). History of the Media, Radio, and Television. Retrieved from Ezine Articles: http://ezinearticles.com/?History-of-the-Media,-Radio,-and- Television&id=15556 Sandilands, T. (2014). Advantages and Disadvantages of Social Media Marketing. Retrieved from Small Business Chronicle: http://smallbusiness.chron.com/advantages- disadvantages-social-media-marketing-21890.html Simplifying the Web. (2014). Search Engine Optimization vs. Search Engine Marketing: What's the Difference? Retrieved from Active Search Results: http://www.activesearchresults.com/articles/153274.php Singel, R. (2012, October 27). Oct. 27, 1994: Web Gives birth to Banner Ads. Retrieved from Wired: http://www.wired.com/thisdayintech/2010/10/1027hotwired-banner-ads/ Stelter, B. (2011, May 3). Ownership of TV Sets Falls in US. Retrieved from The New York Times: http://www.nytimes.com/2011/05/03/business/media/03television.html?_r=2& Thompson, V. (2014). How to Harness Social Media for Real Marketing Results. Retrieved from Small Business Chronicle: http://smallbusiness.chron.com/harness-social-media-real- marketing-results-74947.html What is eMarketing and how is it better than traditional marketing? (2014). Retrieved from Quirk: Brave Curious Minds: http://www.quirk.biz/resources/88/What-is-eMarketing- and-how-is-it-better-than-traditional-marketing
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