Introduction
A
marketers job is to carefully manage all of the elements of the marketing
mix: product, place, promotion and price. It is a delicate balancing
act and the rapid evolution of internet technology has added a new
variable to each element of the marketing mix. These changes are
happening so rapidly that it is difficult to keep up with and to
understand how each element is affected by change. This has
undoubtedly made the marketers job more difficult. In order to cut
through some of the fog, this post will look at how the internet has affected the marketing
mix. It will then look at the newspaper industry as a case study in
order to provide a real world example of how digital marketing has
thrown a wrench in the industry's marketing mix.
How the Internet Changed Marketing
There
are four elements of the marketing mix (product, place, promotion and
price) and while it is evident that the internet has changed the
promotion part of the marketing mix, it is worth considering how it
has also affects product, place and price.
Broadly
speaking, the internet has affected the prices of many marketplaces
because it allows for greater efficiencies in production, a larger
number of possible competitors and an increase in transparency of
prices, all of which are factors that put downward pressure on
prices.
Today, eCommerce allows consumers to
choose from a much wider variety of products. For example, if you
were to purchase a new shower curtain you can choose from the
products offered online in addition to what is offered in your local
retail outlets. So instead of having a couple dozen shower curtains
to choose from, now you can choose from hundreds. This increase in
product selection puts pressure on companies to differentiate and
specialize their product to a greater degree, affecting the product
element of the marketing mix.
Lastly, the internet has affected the
traditional distribution models of the past by allowing companies to
reach consumers who would have been out of reach without the
internet, and vice versa, altering the place element of the marketing
mix.
Case
Study: A Look at the Newspaper Industry
Arguably,
the current difficulties faced by the newspaper industry are born out
of a misunderstanding of what product they were selling. It is easy
to think that newspapers are in the business of selling the news to
its subscribers and this is undoubtedly the impression that many
major publications were under. They are also, however, in the
business of selling ad space to advertisers. This isn't a small part
of their business either, as advertising revenue accounts for 80% of
newspaper's income.
When
the internet began selling banner ads in 1993, a major competitor to
the newspaper stepped onto the stage. Advertising on the internet
offered some major advantages over the traditional newspaper ad.
Banner ads are generally less expensive than the traditional ad and
they have detailed return on investment (ROI) measurements and
analytics, which allow advertisers to track the success of their ads
in a way that was not feasible before. Additionally, newspaper
advertisements offer a shorter shelf life than banner ads. Daily
publications would only last for a day, while advertising on a
website lasts significantly longer. Another advantage of the banner
ad is that online content has a higher younger market readership than
newspapers, which is important as many companies target the coveted
18-25 demographic.
The
internet also proved to be a serious competitor to newspapers in
providing information to readers. Classified websites
like Kijiji and Craigslist provided a more intuitive and free version
of the paid classifieds offered by the newspapers while eHarmony
rendered the personals obsolete. This is in part because the internet
eliminated the barrier to entry that had previously prevented
competing publications from emerging. The internet eliminated the
need for expenses related to starting a newspaper such as printing
equipment, input costs, fixed costs, labour, space, and distribution
costs. Now, costs that would have been prohibitively high for a new
publication to emerge no longer existed and rival online publications
were nipping at the heels of the newspaper giants.
The
newspaper industry suffered a major blow from these shifting market
forces. From 2005 to 2009 newspaper advertising revenue dropped by
44%, and during this time period we begin to see the
decline of the newspaper. From January of June 2009 alone, 105
newspapers were shuttered, 10,000 jobs were lost and print ad sales
fell 30% in the first quarter of 2009 alone. The newspaper
industry was in free fall. Meanwhile, the internet was seeing record
breaking growth in advertising revenues. In 2004 the internet
advertising revenue in the U.S. alone reached $2.69 billion in the
fourth quarter, which was the highest revenue quarter ever reported.
In 2005 internet advertising was up 34% and in 2006 had increased
another 37%.
If
newspapers had been more intuitive, they would have entered the
digital marketplace more convincingly. An early adoption of and
investment in websites that offered the same content as their printed
medium would have allowed newspapers to translate their offline
readership online, shifting their offline advertising space and
allowing them to maintain their important advertising revenue. Many
newspapers, comfortable in the monopoly they had enjoyed for so long,
and under the wrong impression that they were just selling the news
didn't view the internet as a serious threat to their business.
Instead, newspapers went online late, if at all, and they did so
grudgingly. Today, newspapers have shifted online to varying degrees
of success and many are still struggling to monetize their websites.
Buzzfeed
In
light of these technological developments, many onlookers consider
the industry a lost cause, thinking that newspapers will go the way
of the dodo. However this new climate isn't entirely uninhabitable to
news publications. To illustrate this point consider the publication
Buzzfeed.
Buzzfeed is emerging as a media giant of the modern age,
however it is commonly dismissed as a superficial website that
provides viewers with the latest LOLcats, listicles and memes and is often dismissed as lacking in journalistic integrity. For this reason
news providers may be overlooking a successful business model that
serves as an excellent example of the opportunities provided by
digital marketing. In December of 2013, Buzzfeed had 130
million unique visitors, 92 million views on their Youtube videos and
2.7 million Youtube subscribers. Much of Buzzfeed's success is
credited to a savvy digital marketing campaign.
Jonah
Peretti, the founder and CEO of Buzzfeed, caught on to the idea that
would lead to Buzzfeed success when he began creating content and
tracking it to learn the way viral content spreads. Peretti applied
what he learned in Buzzfeed's early days by using early analytics
tools to track which headlines weren't working and would then rewrite
the headlines. While Peretti was also interested in search engine
optimization, his main focus was in how people shared content, and
catered Buzzfeed's content to social sharing.
“Instead of making content that the robots like, it was more satisfying to make content that humans want to share.” -Jonah Peretti
Buzzfeed's
strategy is now based on this type of obsessive measurement. Buzzfeed
uses machine learning to anticipate what content might spread. Each
of Buzzfeed's stories has it's own dashboard, and every story is
carefully monitored. It tracks how many seed views the content gets
as well as social views. This helps Buzzfeed learn what is successful
in addition to knowing how to adapt content for more social sharing
by tweaking the headlines or boosting under-performing stories with
higher visibility.
Not
only has Buzzfeed learned how to create optimal content for social
sharing, it has made a very profitable business model based on native
advertising. Native advertising is paid-for content in the form of
stories with a “featured partner” label. This has proved very
successful for Buzzfeed. Buzzfeed's native advertising boasts impressive traffic
numbers in addition to being content that viewers engage with and
share. A Motorolla campaign called “10 places you need to visitonce in your life” had an impressive click-through rate of 6.1%. A
Virgin Mobile campaign “27 Cats That Just Can't Handle It”
generated 9.7 million engagements.
Buzzfeed's
form of native advertising faces some criticism from the journalism
community. Wall Street Journal managing editor Gerald Baker
said,
“The clear delineation between news and advertising is becoming more blurred. We have to resist that.”
Andrew Sullivan,
writer for The Dish and an influential blogger and commentator said,
“If journalism is not understood to be separate from advertising, then it has lost something incredibly important in a democratic society.”
These criticisms touch on a key difference between
Buzzfeed and the typical news publication. While traditional news
publications are composed of almost entirely of hard news and
legitimate journalism, Buzzfeed has a more eclectic mix. Buzzfeed's
content is made up of various forms of stories, from puppies and
kittens, entertainment, memes, lists and GIFs, to the forms of hard
hitting news provided by traditional news outlets. Buzzfeed even has
a prominent LGBT section, which covers important issues in LGBT
activism, an issue glossed over by many traditional publications.
This mix of irreverent and serious content is integral to Buzzfeed's
brand and success.
"It's a complete failure of mainstream media that has disenfranchised the whole generation, they say young people don't give a shit about news. That's a bunch of malarkey. Because it affects their lives so much. BuzzFeed can be the next CNN. And quite frankly I hope they are, because news needs it." -Buzzfeed CEO Shane Smith
The
types of stories used for native advertising are never the serious
news stories, instead they are made up of lighthearted and fun
content. This clear distinction allows Buzzfeed to maintain its
credibility and trustworthiness as a news provider. In addition, by
lending focus to the more lighthearted stories, Buzzfeed is appealing
to younger generations and creating impressive traffic on their site.
Buzzfeed serves as an excellent example both to other news publications and other businesses in general. It success proves how powerful digital marketing can be and shows what opportunities can be afforded if one embraces the challenges of digital technology.
Sources
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