Online Reviews

With the progress that information technology has made so far, consumers have more opportunities to share their experience and learn about other’s experiences. In the past, consumers mostly bought what looked good and convincing in the advertisement or sales speech. Before information was so easily available, consumers believed that expensive items have better quality and hence the quote “ what you pay is what you get” became a norm.

Reviews are beneficial to both customers and sellers. While reviews give customers better idea about whether the product will fit their expectations, they give sellers valuable information such as whether they are using the right strategy, at a faster rate and cheaper price. One cannot even get such valuable information after spending hundreds of thousand of dollars on surveys. So overall online reviews provide learning to both customers and sellers.

Before online reviews, companies needed to establish their brands in order to be able to get customers. Online reviews have made brands less important compared to performance and experience. Small businesses have benefited the most from online customer reviews because they know that the negative reviews are not going to hurt their brand as much as they do a well known brands. Reviews also don’t help or hurt products that are preferred and for which customers know what to expect. For example, products like milk, subway, toothpaste etc do not need to have reviews because customer have their preferred brand/flavor and they know what to expect from it. More expensive the product is, more do customers rely on reviews to aid in their research. For example, people would try to get opinions and reviews for product like cars, houses, TVs and electronics.

Email Marketing

After this week’s discussion post, I thought I would write little more about E-mail marketing. I always thought that email marketing was not worth spending time and money for until I learned some facts about it. I mentioned in my discussion post that email usage has been on decline (Data source: www.Forbes.com) but according to few other sources, sales from email marketing has been on rise over the past few years. 91% of customers still use email. Even though social media use has increased over past few years, email is still the most effective tool to build 1-on-1 relationship with customers. Usually social media is an environment fo r group talks or general discussion and hence less personal than email. Email conversion rates to purchase are 3 times more than that of social media. Email provides an amazing ROI of 4,300 percent (Source: US direct marketing association). No other marketing channel provides an ROI as high as this. According to a direct marketing association:

• -          Email generates $39.4 for every dollar spent
• -          Search generates $22.38 for every dollar spent
• -          Display generates $19.71 for every dollar spent
• -          Social media generates $12.9 for every dollar spent

Below chart shows another fact about email marketing being a far more effective e-commerce customer acquisition channel.

Cross Channel Shopping/Marketing

After listening to Roy Wallen’s guest lecture, I thought I should also give my 2 cents on cross channel shopping/marketing. Consumers now a day are relying on more than one channel of shopping/marketing. People are learning about products through one channel (television advertisement, printed advertisement, internet or word of mouth), doing their research using another channel (i.e. internet reviews, price compare etc) and purchasing the products through another channel (i.e. internet, phone or in store). Recently I bought a car and it was a big decision for me because of the amount of money involved and number of options available. My first challenge was to find out my options (such as new/used, SUV/sedan, FWD/AWD etc.) based on my budget). I used internet to learn about user reviews and compare prices then I asked my coworkers, friends and families to learn about their experiences about different brands. I checked out auto magazines and printed advertisements to learn about different deals and finally went to dealers to take a test drive and purchase. I used more than one channel of marketing to make my decision.

I also completely agree with Roy on his point that customers don’t make distinction between channels. Customer experience is cumulative so companies should try to re enforce their brands and provide positive customer experience on multiple channels. For example, I bought a GPS on Wal-Mart website and chose to pick it up from a nearby Wal-Mart store. When I tried it for couple of days, it kept freezing up on me so I went to the same store from where I had picked it up and told them that the product was not as good as I thought and I wanted to return it. The Wal-Mart store manager told me that they could not take it back since I had bought it on Wal-Mart website and I would have to ship it back to Wal-Mart warehouse in order to get my money back. I considered it as a bad experience from Wal-Mart regardless what channel I used to buy the product and probably avoid shopping from them again.

According to an interesting study done by Wharton School, University of Pennsylvania, two thirds of all shoppers regularly use more than one channel for shopping. Click here to access the study results.

Also, according to this study, multi-channel shoppers are most loyal and likely to spend more money than mono channel shoppers. This is because shoppers that use more than one channel are likely to do more research and hence they clearly know what they want and where they want it from.

So, it is very critical for marketer/retailer to make sure that they treat customers same (i.e. positively) on every channel and give them the best treatment regardless where they buy it from. Customer should be able to return the product that they bought online or use the coupon that the got online in store. Some of the industries that provide best cross channel shopping are fast food chains (i.e. Domino’s, Chipotle) and Banks (i.e. Chase).

Future of Advertising and Analytics

After learning about Advertising, Analytics and KPIs this week, I came across this very interesting HBR article “Advertising Analytics 2.0” written by Wes Nichols. The article talks about the future of advertising. Big companies use multiple channels of marketing to advertise their products and services. The article talks about how traditionally marketers have been analyzing advertisement performance of each source (such as TV, printing and internet) independently and reallocating their advertising budget based on that analysis.

Do you agree with this? Or do you think that the sales numbers can not be broken down by each independent source of advertisement? The article gives a very good example of how purchase could be a result of combination of information provided by multiple sources of marketing. For example, now a days customer may watch an advertisement on TV then see a bill board or printed advertisement with a special offer and then check out user reviews on internet before making decision. So one can not say that the conversion was attributed solely to the internet marketing just because that’s the only place where consumer activity can be effectively tracked.

It is true that online marketing through search engines and social media can provide you more bang for buck because of better ability to target customer but marketers should look at interactive effect of all advertising sources in order to optimize their budget better. Cross effects between channels are very difficult to capture. Companies like Target, Walmart, Gap and Macy's  have had some success optimizing their sales using multiple marketing channels but still there is a lot of research that is being done to create better model that can help companies find out the best combination of marketing channels for their products/services. This is the future of advertisement and analytics.

Social Media Marketing

Before the advent of media and advertisements, people were buying products and services through word of mouth of their friends and family. It is human nature to be curious about other people’s experience and reviews about product or service. For example, people would ask their friends and family about a doctor before seeing him/her for treatment. Then came an era when people started learning about more options through televised and printed advertisements. They were still asking their friends and families for their experience but the amount of information they would receive was very little because they knew limited number of people and not all of them had experience with every product and service.

Same way, companies were getting limited amount of information about their customers likes, dislikes, needs and wants. Companies would get very limited amount of information through surveys and many times the information they would receive was biased because of the bias in survey design or the population sample. Most of the times the information was not real time and it would take months or years before companies would identify a pattern and make adjustment in their products or services.

With the advent of Internet and social media, people are learning not only about their friends’ and families’ experience but also about the experience of community, region and people around the world. Consumers trust other consumers’ experiences and reviews more than a speech from sales person or model in advertisement. Social media has given consumers freedom and platform to put their thoughts and experiences in front of the world. It also works in favor of companies because comments put by customers does marketing for their products.  Sometimes user reviews and comments also work as survey and hence learning for companies. According to one statistic, the number of users on facebook is third largest after the population of India and China. No advertisement platform can reach such a huge consumer base through traditional way of marketing

Social media has not only become a great platform for marketing commercial products but also for talent marketing. More and more companies and recruiters are searching talents and posting jobs on websites like Linkedin. 97% of all HR and recruiters use Linkedin in their recruiting efforts. 77% of all job openings are posted on Linkedin. Social media is changing the method of applying for a job by making companies visit applicant profile rather than applicants posting their resume to company website.

Source: http://socialmediatoday.com/leaderswest/1440796/infographic-77-all-jobs-are-posted-linkedin

Source: http://socialmediatoday.com/leaderswest/1440796/infographic-77-all-jobs-are-posted-linkedin

Social media like blogging and twitter has changed the field of journalism. Blogs and tweets have provided platform for young and less experienced journalists to post their articles and throughts. Overall, social media has created advantage for both consumers and marketers by introducing freedom and transparency to the process.

Sources:

/http://blogs.hbr.org/2012/08/marketing-is-dead

http://theundercoverrecruiter.com/infographic-linkedin-user-statistics-network-profiles-groups-applications/

Paid vs. Organic Search

Paid search has been very popular among many businesses as an inexpensive and effective way to market their products. For a long time companies have been using television, magazines and newspapers to market their products. The biggest issue with those mediums of marketing was that companies were paying to advertise their products to those whom they were not targeting. The other issue was that the companies were not getting valuable data such as who is watching/reading their advertisements, user reviews etc. In engineering terms, there was no feedback cycle for companies through conventional ways of marketing. Paid search has opened doors for small businesses and made it possible for them to reach consumers beyond their local reach. Based on information provided on wordstream blog, businesses make an average of $2 for every $1 they spend on AdWord. Please click this link to see some stats and success stories.

Now the biggest question is whether organic search is better or paid search?

Organic search is free. In organic search, search engines like Google, Yahoo and Bing direct your search to the website links for free based on the match between keywords and the content in the website. It is also called search engine optimization (SEO). In SEO, marketers have to put more effort in designing their websites content in such a way that it appears in result for relevant searches. So even though one is not paying directly to Google, he/she is spending more time and money on optimizing website. Getting listed among the top organic search results draws lots of traffic as many people consider it more credible compared to paid advertisement. The downside is that it takes longer to get to the relevant content and if the search engine algorithm gets upgraded then the ranking could drop and all the time and money spent behind website design goes to waste.

Paid search requires companies to set keywords, which when used in the search directs users to the advertising link. Advertisers only pay when users click on the link and visit the content. Paid search is very useful when marketers are trying to target specific audience, geography, season etc. Organic search is not effective to narrow the audience. Contextual search option is available in paid search. In general paid search provides better control over organic search.

In the end, whether to use organic or paid search depends on need.  It makes more sense for the companies with specific target market to use paid search. 

Sources:

http://www.brand5.com/organic-vs-paid-search

http://www.entrepreneur.com/article/233159#

Search Engine War

With Microsoft expanding into the search engine business, the competition has become interesting and fierce in search engine market. For years, Google had not much competition in the search engine business but now it has a reason to worry for a long term future. Even though Google is still dominating the market, Bing has grown faster in a short time. It will still take Bing years to catch up with Google but considering some of the missteps taken by Google in recent past, people have become more alert. Click this link to read more about some of the missteps taken by Google. In this situation it is nice to have couple of alternate choices like Yahoo and Bing. Both competitors are continuously making their search engines better to compete with Google. Below are some of the comparisons.

Bing uses virtual robots called spiders to map a website. Once a website is submitted to bing, the spider automatically collects all the information about that website such as content, tags, links to other pages etc and maps it. Spider can read both static and dynamic content, flash files and video content of the website. It constantly looks for updates on your website and captures them. Bing has added some features such as news, maps, images, videos etc to compete with Google.

Yahoo uses its own web-crawler technology. Yahoo also uses a selection based search in which users can use their mouse to search and the results are displayed in a moving frame. Yahoo charges certain amount to the commercial websites and non commercial websites are listed for free. Besides search, Yahoo provides range of services same as Google.

Google uses combination of technologies such as crawler, query processor and indexer. Google uses a patented algorithm called pagerank that helps rank pages to match the search string. Besides search, Google also provides features such as weather, stock quotes, maps, news, calculator, images, videos, shopping, apps, books, email, blogs etc. Google’s adword service is very popular among businesses to market their products.