Trends in Digital Marketing and E-commerce

Linus Gregoriadis, Head of ResearchE-consultancy.comEmail: linus@e-consultancy.com Website: www.e-consultancy.com

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Presentation overview

1. Online advertising2. Search engine marketing3. Vertical search4. E-commerce and affiliate marketing5. Social media and social commerce6. ‘Atomisation’7. User experience and Customer

Engagement

Online advertising landscape

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Three big deals in 2007

• Google’s proposed acquisition of DoubleClick for $3.1 billion.

• Microsoft buys aQuantive (owner of Atlas) for $6 billion.

• Microsoft pays $240 million for a 1.6% stake in Facebook.

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Online marketing landscape

• Online now accounts for 15% of the total UK advertising market and is likely to hit £2.75 billion this year (IAB).

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Trends in display advertising …

Increased importance of behavioural targeting for boosting conversion rates and providing a better online experience. Yahoo! bought online ad network BlueLithium for $300 million;

AOL acquired Tacoda; Microsoft now owns DRIVEpm.

Leading publishers including The Guardian, News International, FT and Emap agree alliance to share information on reader behaviour. Talks with Revenue Science.

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Rise and rise of search

Source: E-consultancy Search Engine Marketing Buyer’s Guide 2007

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Search Engine Marketing - trends

• Search has become more strategic, and part of integrated marketing plans.

• SEO gains ground - PPC less cost effective than before.

• Introduction of Universal Search creates new challenges and opportunities.

• PPC is becoming more like SEO.

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Google dominates …

• Google is used for 70-80% of UK searches.

• 60% of companies surveyed by E-consultancy believe that Google’s dominance represents some sort of risk … though the vast majority (80%) rate it as the best search engine for ROI.

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Vertical Search

• Could vertical search erode Google’s dominance?– More than half of E-consultancy users (54%) said they

would be ‘very likely’ to use a search engine that focused specifically on serving their specific business / work needs.*

• A further 40% said they would be ‘quite likely’.

* E-consultancy / Convera Vertical Search Survey 2007 (Preliminary results)

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Vertical Search – Benefits

• Keep users on-site 62%*• Improve brand (by becoming

authority website) 62%• Potential to monetise through

advertising 52%• Reclaims online community

from Google 42%

* Percentage of publishers citing as ‘major benefit’

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Vertical Search – Disadvantages

• Point users to competitors 37%*• Hassle (support/maintenance) 29%• Resource issues 21%• No clear business opportunity 15%

* Percentage of publishers citing as ‘major downside’

Survey closes tomorrow night: http://tinyurl.com/25fqct

E-commerce and affiliate marketing

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E-commerce landscape

• Online sales in the UK will amount to an estimated £42bn in 2007, up from £30.2bn last year, according to the IMRG.– The average UK online shopper will spend £1,600 in

2007.– Online sales will reach an estimated £78bn a year by

2010.

1515

% of internet sales by source of referral

(Channel Advisor)

Online buying behaviour is changing ...

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Affiliate Marketing …

• Affiliate Marketing is seen as ‘most cost effective channel’.

• It will drive in the region of £3 billion worth of sales in 2007.

• Move to ‘Affiliate 2.0’

* E-consultancy / buy.at Affiliate Marketing Merchants Survey

Social Media and Social Commerce

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Ratings and Reviews

Wikis Social Networks

Tagging

User-generated Content

Blogs

Peer-2-peer

Facebook

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Social Networks = “sticky”, high page views / session, high repeat visits, youth audiences, reachBlogs = PR, niches, search rankings“UGC” = cheap content, increased conversion rates, user loyalty / trustTags = improved navigation, categorisation, conversion rate optimisation, SEO

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Social Media

The profile of social media has risen dramatically in recent months because of sites such as Facebook and Twitter which are used by millions of people.

The challenge for companies is to find a natural way to start conversations about their products and services online.

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What is Social Commerce?

• Put simply, social commerce is about customers having the means to interact with one another in order to make better buying decisions.

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Importance of ratings and reviews, and user-generated content

• Customer ratings & reviews are being used by 28% of online sellers, with more than half (52%) saying that they were considering the use of this feature.*

More than half of all online sellers (51%) consider UGC as either ‘extremely important’ or ‘very important’ to company strategy over the next year.

*E-consultancy / Bazaarvoice Social Commerce Report 2007

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Benefits of ratings and reviews

Benefits of Ratings and Reviews

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%

Higher conversion rates

Improved retention and loyalty

SEO benefit Ideas for product/services

development Differentiation from

competitors Lower costs to serve customer

Reduced returns rate

Percentage of respondents rating as ‘major benefit’ (Social Commerce Report 2007)

‘Atomisation’

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SyndicationFeeds

Widgets

Aggregation

Mash-ups“Web as platform”

Open APIs

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iRobot

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Fragmentation of content

• Publishers should no longer think about their content just as something which appears on their destination website.

Growth in personalised home pages.

Widgets, feeds and open APIs are an opportunity.

User experience and customer engagement

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User Experience is key

• More grasp of commercial benefits of user experience investment.

• Tiny increase in conversions = £££.

• Specialist agencies (user-centred design services, eye-tracking etc).

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What is Customer Engagement?

• ‘Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.’*

Recency of visits, frequency of visits; propensity to give feedback, recommend and create user-generated content.

Digital environment offers unprecedented scope for interaction and measurement of that interaction.

* Richard Sedley of cScape, adapted from Ron Shevlin.

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Top strategies for online engagement

E-consultancy / cScape Customer Engagement Report 2008

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Top tactics for online engagement

E-consultancy / cScape Customer Engagement Report 2008

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Conclusions

• Important to think of online publication as more than just a destination website. – In a world of ‘atomisation’, what is the most effective and

appropriate way of getting the brand out there?

• Engagement with audience is vital.– How is that engagement being defined and measured, and

how is it being deepened?

Questions?Linus Gregoriadis, Head of ResearchE-consultancy.comEmail: linus@e-consultancy.com Website: www.e-consultancy.com