Friday, May 16, 2014

Effectively Using Online Marketing Channels

Internet marketing is in an ever changing state of development with both successes and failures. At times it can be a cost effective approach to reach out to increasingly Internet savvy consumers but at other times the total online marketing mix may be incorrect leading to wasted resources.  Research by Li and Kannan (2014) delves into online channels, visits and purchases. Their study helps in understanding how channels work together to create effective practices.

Marketing channels range but often include direct URL, searches, referral sites, emails, and banner ads. It is also possible that customers may choose a display impression but never actually click upon it. Each channel has varying effectiveness in terms of its ability to encourage customers to make a purchase.  In other instances these channels may be used in combination along with newer mediums not yet incorporated into the mainstream. 

In any online marketing campaign there costs of effort and cognitive costs. Finding the necessary information to make the purchase has a cost factor (Shugan, 1980). If this information is difficult to find, doesn’t move to a purchase quickly, and is difficult to navigate customers may deem these costs as too high and simply move onto other sites without making a purchase.  The process of finding and purchasing should be smooth, simple, and use the least amount of effort.

There are also cognitive costs associated with the processing of information (Johnson, et. al., 2003). All processing of information takes considerable energy. Difficult to understand pages with irrelevant information raise cognitive costs. Marketing should encourage faster and simpler mental processing based upon the merits of the product and the audience. There are natural differences in the type of customers attracted. 

The authors found that it is necessary to estimate the effects of visiting and purchasing to find appropriate avenues of raising click to purchase rates. The channels often work together but those firms with strong brands can obtain as much traffic through organic searches as they can through paid searches. Paid searches constitute around 50% of online marketing expenditures but if removed customers switched to organic searches. Email and organic searches have a longer impact than click through ads and should have greater emphasis in a marketing campaign. Likewise, retargeting click through ads seemed to be less effective over time.

Johnson, E. et. al. (2003), Cognitive Lock-In and the Power Law of Practice. Journal of Marketing, 67 (April), 62–75.

Li, H. and Kannan, P. (2014). Attributing Conversions in a Multichannel Online Marketing Environment: An Empirical Model and a Field Experiment. Journal of Marketing Research, Vol. LI

Shugan, Steven M. (1980), “The Cost of Thinking,” Journal of Consumer Research, 7 (2), 99–111.

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