Excerpt
Table of Contents
ABSTRACT
TABLE OF CONTENTS
LIST OF ABBREVIATIONS
LIST OF FIGURES
1. INTRODUCTION
2. MAIN PART
2.1 Transition from Offline to Online
2.2 Important Marketing Channels of Current Businesses
2.2.1 Search Engine Marketing
2.2.2 Organic Search
2.2.3 Sponsored Search
2.2.4 Google Shopping
2.2.5 Display Advertising
2.2.6 E-Mail Marketing
2.2.7 Affiliate Marketing
2.2.8 Mobile and Social Media Advertising
2.3 The Rise of the Tech Giants
2.4 Data Collection and Ownership of Data
2.4.1 Data Octopuses and Monopoly Positions
2.4.2 Monetization of Data
2.4.3 Algorithms and Process Optimization
2.4.4 Digital Heritage
3. CONCLUSION
PUBLICATION BIBLIOGRAPHY
Abstract
This paper explores the role and responsibilities that user data plays in the market influence of larger social media companies. The reason for these inquiries are the current market conditions in which large companies collect user data on a huge scale to create a profile of their users.
In diesem Beitrag wird der Frage nachgegangen, welche Rolle Nutzerdaten im Zusammenhang mit dem Einfluss größerer Social-Media Unternehmen spielen und welche Verantwortung diese bezüglich der erhobenen Daten tragen. Grund für diese Fragestellungen sind die momentanen Marktbedingungen, unter denen große Unternehmen Nutzerdaten in enormen maßen sammeln und diese nutzen, um ein Profil der Nutzer zu erstellen.
LIST OF ABBREVIATIONS
E.g. Example given
l.e. That is to say
Ca. Circa
SEM Search Engine Marketing
SEO Search Engine Optimization
CTR Click-Through-Rate
VR Virtual Reality
CPC Cost-per-Click
PPC Pay-Per-Click
CPM Cost-Per-Mile model
CRM Customer-Relationship Management
CLV Customer-Lifetime-Value
ARPU Average Revenue per User
NLP Natural language processing
CPL Cost-per-Lead
CPS Cost-per-Sale
LIST OF FIGURES
Figure 1: Stages of the online purchase process of a product, Marqua, S. (19.05. 2021). Trafficdesign. Von https://www.trafficdesign.de/knowhow/channel-management/online-marketing-kanaele abgerufen
Figure 2: Visualization of different customer data types, Pieper, S. (02.06.2021). Artegic. Von https://www.artegic.com/blog_de/was-ist-der-unterschied-zwischen-first-party-second-party-und-third-party-data/ abgerufen
Figure 3: Development of average weekly working hours, Gentsch, P. (04.2021). Von https://docplayer.org/154817664-Business-ki-veraendert-unternehmen-und-maerkte.html abgerufen.
Figure 4: Operational marketing areas of artificial intelligence in different sectors , T3N digital pioneers. (13. 03 2019). KI im Marketing: Mit lernenden Algorithmen zu neuen Zielgruppen. Von https://t3n.de/magazin/ki-marketing-lernenden-algorithmen-neuen-zielgruppen-247321/ abgerufen
1. INTRODUCTION
Of particular interest and complexity under the umbrella of the marketing strategy of a corporation is the topic of its digital presence. This focuses specially on all market participants, e.g., competitors and consumers as well as all persons, companies, and institutions that actively participate in the economic market through supply and demand by buying, selling, or exchanging goods or services. This digital presence plays nowadays a crucial role in our digitalised world.
For some time now, the topic of online marketing has been an important subject of discussion, its sub-areas are constantly evolving and there is no lack of definitions. Some of them, which also serve as the basis for my research, are as follows:
1) "Marketing activities that are carried out over the internet are referred to as online marketing. This strategy is gaining more and more value as a result of digitization. Online marketing differs from traditional marketing in that it includes activities such as e-mail marketing, search engine marketing, affiliate marketing, influencer marketing, programmatic advertising, social media marketing, and more(OnlineMarketing.de, 2021)”.
2) "The term "marketing" generally covers those measures that help to consistently align all of a company's activities with the current and future requirements of the market (Weis, 1993)”.
3) "Marketing is carried out through online media in online marketing (online + marketing = online marketing). The central focus of online marketing is often on communication policy. And, if you want to attract new prospects, inquirers, or customers today, you need to be aware of what is going on online (Onlinemarketingpraxis, 2021)”. This clarifies the basic questions about online marketing. But due to the numerous factors that need to be considered in this topic, the different views and approaches on how a company should act digitally in the 21st century are used to work out a basic understanding for this thesis in the beginning. Therefore, the paper will first review the basics of e-marketing concerning the historical shift from offline to online marketing. It will also take a closer look at the different channels that need to be used to create a comprehensive digital presence. This is followed by a discussion about the topic of” data”, in the context of how it is generated, who has access to it, to what extent it is used to generate profit, and the role of algorithms in terms of company internal optimization of marketing processes. This in turn forms the basis for the core topic of this work, namely the use of all this information about their customers in a global, digitalised context by companies.
2. MAIN PART
In order to address the question of this work, it is first necessary to shed light on the background and the development of digital sales strategies. In a world with over 4.20 billion active social media users, every expert is expected to be at least familiar with the fundamentals of digital marketing(Chaffey, 2021). The advantages are obviously the increased reachability of a larger audience in a short amount of time. The technological advancement has resulted in a significant reduction in the customer base of traditional marketing agencies and divisions because people have transitioned to tablets, phones, and computers, and these are the areas where digital marketers have gained the most ground(Monappa, 2021).
2.1 Transition from Offline to Online
The beginning of the digital age can be placed in the 1990s, when the term "digital marketing" was first used. It was also the beginning of the internet and the Web 1.0 platform, which allowed its users to find the information they wanted but were unable to share on the web. Besides, this whole development was viewed with great scepticism by marketers worldwide because, as with so many new developments, it was not clear whether the strategy of this digital platform would even work, or even be profitable.
It must be mentioned that at that time, the internet was nothing like the technology we have today. HotWired.com were the first to buy a clickable banner in 1993 as a part of an online campaign by AT&T, an American telecommunication giant. In the following time frame of four months 44% of the internet users sawing this ad used the link, which is something barely happening nowadays(Teads, 2021). This date can be seen as a transition from offline marketing strategies to a now growing online sales strategy of a rapid increasing number of companies worldwide. Many similar shifts followed. 1994 symbols the entry of many new technologies into the market, many of which were also used for advertising purposes. The search engine Yahoo, for example, was founded and made publicly available in the same year, marking the entry into the world wide web. The search engine recorded almost one million hits during its first year, which was met with wide-awake ears in the marketing industry. A comprehensive restructuring of digital marketing was the result. Companies began to create websites and optimise them at enormous expense to achieve a higher hit rate (Monappa, 2021). In 1996 there was an increase in the introduction of other search engines and tools such as HotBot, LookSmart and Alexa. However, those smaller search engines could not compete with the ones from larger companies(Institution, 2017).
One if not the biggest search engine nowadays was founded in 1998, and that was Google. Likewise, Microsoft created the MSN search engine and Yahoo created the Yahoo web search. However, Google prevailed over all the smaller competitors, not least because their search engine dispensed with advertising, which enabled faster loading. Thus, the digital world experienced a gigantic surge in 2006, when search engine traffic was reported to have grown by 6.4 billion in one month. Not to be left behind, Microsoft put MSN on the back burner and launched Live Search to compete with Google and Yahoo(Monappa, 2021).
While search engines were conquering the internet bit by bit, the first social media channels were also emerging, competing for a place in the spotlight. Still, there were some losers. Microsoft, for example, discontinued MSN Messenger in 2014 because it failed to compete with other networks such as Facebook, Instagram and Twitter. LinkedIn, as a social network today which gave business professionals the opportunity to communicate with each other via a common platform, was launched in 2002 and plays an increasingly important role today(Institution, 2017).
Another big step in digital marketing was taken in 2001, when the first mobile marketing campaign was created by Universal Music. This was an essential step that showed companies in which direction marketing strategies could still develop.
2.2 Important Marketing Channels of Current Businesses
The role of marketing channels with the aim to generate profit in online marketing can be explained very well with the following diagram.
Abbildung in dieser Leseprobe nicht enthalten
Figure 1: Stages of the online purchase process of a product
From the moment a customer recognises a product until he or she buys it, there are different phases. Starting with phase 1, in which the click-through rate represents the proportion of users who actually reach the advertiser's website after seeing an advertising medium such as a Google Ad. Subsequently, in phase 2, the customer or visitor to the website must be stimulated to conclude the expectations that have been raised, i.e., phase 3, the purchase. If this works well, the conversion rate increases and so does the average value of all visitors, which in turn enables the advertiser to incur higher costs for the presentation and positioning of his advertising media(Marqua, 2021).
2.2.1 Search Engine Marketing (SEM)
The placement of hyperlinks that appear on the result pages of search engines is referred to as Search Engine Marketing. There is a distinction to be made here between unpaid search results (Organic Search) and the placement of paid advertisements (Paid or Sponsored Search). When looking at the German search engine market, one gets the following picture:
Google is the most used search engine in Germany, with a market share of more than 91 percent, which is followed by Microsoft's (3,5%) and Yahoo’s search engines (1,4%). Microsoft and Yahoo signed an agreement in 2009 that included, among other things, that both services will use Microsoft's search technology and Yahoo's ad system in the future.
The resulting advertising system, Bing ads, bears many similarities to Google's. Because of this resemblance and Google's monopoly, concentrating on the industry leader's search algorithm and the Google Ads advertising system in the SEM field is usually sufficient. The number of advertisements on Google's search results page varies and has notably increased in recent years. Initially, advertisements might be found directly beside or above the organic search results.
In the meantime, the system has been tweaked: advertisements now appear only above the search results, with just product ads (Google Shopping) appearing to the right. Whether and how many advertisements are displayed is determined by the keyword used: It appears that Google responds to transactional searches – that is, searches that imply the completion of a transaction – with a much more aggressive ad blocking strategy than it does to informational searches.
In addition to the standard search results and displays, other formats such as image results, videos, and local search results (with a map) are available. In the industry, these elements are referred to as Universal or Blended Search(Marqua, 2021).
2.2.2 Organic Search
The used search algorithm is the foundation of every search engine because the perceived quality of a search engine is determined by the algorithm used and how the results are shown.
Because of advertisements and blended search, organic search results are fading into the background. Only two organic search results are visible at the widescreen resolution of 1280x768 pixels without the user having to "scroll."
As an example:
There are four advertisements in total, plus maybe further Google Shopping integrations. Users see only organic results when they use adblockers, same as they did before.
To improve the relevance of one's own website in organic search results, specific measures must be taken. (SEO – Search Engine Optimization) is the term used to describe the implementation of these measures, which can be divided into On-Site and Off-Site optimizations.
On-Site Optimisation: Optimisation of own contents and source text in order to achieve better Google rankings.
Off-Site Optimisation entails, for example, the creation of links from other websites that point to your own.
The greater the perceived reputation of the linking page by the search engine, the greater the favourable impact of the links. This ranking method, which Google helped to popularize towards the end of the 1990s, is now known as PageRank. Because of the high impact of these links, a separate market has emerged alongside Google Ads, where links can be sold or rented for large sums based on the linked page's estimated rating. Naturally, Google isn't interested in this market: Penalties, i.e., for the source- and target-side, can be imposed if a chargeable relationship is discovered(Marqua, 2021).
2.2.3 Sponsored Search
A sponsored search auction, often known as a keyword auction, is an essential aspect of any modern web host's economic model. It refers to search engine results that are clearly segregated adverts paid for by third parties rather than the core search algorithm(Wikipedia, 2021).
The business model of search engines is based on the display of advertisements. For example, Google generated 89.9% of its revenue (13,866 billion dollars) in the first quarter of 2014. Approximately 75,5% of the users clicked on ads that were displayed on their own websites (also known as a large portion of their own search), while the remaining 24,5 percent clicked on ads that were displayed in the advertiser's advertising network (also known as display advertising).
The price model used in Sponsored Search is known as Cost-per-Click (CPC) or Pay-Per-Click (PPC). Here, the advertiser bids on the search terms (keywords) he has chosen, where his ad should appear above or to the right of the search results and sets a maximum click-through rate. The actual monetary value of a click on an advertisement and the position of the advertisement (the higher the ad rank, the higher the likelihood of a click) are determined by a hidden two-tiered auction: The advertiser who offers the highest price pays the same price for the first and best-positioned ad as the advertiser who offers the lowest price. In addition to the maximum CPC, the 'Quality Factor' of the keywords is included in the auction. This is partly determined by how frequently own advertisements are clicked in comparison to the competition. The click rate, also known as the click-through rate, is a measurement of how many times a user clicks on a link (CTR). The higher this number is, the more relevant the ad appears to be, giving Google an advantage in terms of relevance and hence revenue. As previously stated, the number of blanked advertisements has increased significantly in recent years. This resulted in a steady decline in CPCs in recent years (-9 percent in the first quarter of 2014 over the first quarter of 2013), but a 26 percent increase in the total number of paid clicks. The constant expansion of the Google Partner Networks, as well as the overall increase in the number of searches on the Internet, are other factors in this development. Search Engine Advertising is a method for creating campaigns, configuring them, and optimizing costs in the "Sponsored Search" channel (SEA)(Marqua, 2021).
2.2.4 Google Shopping
Paid product advertisements, sometimes known as Google Shopping, are a relatively new advertising strategy that Google has included to its search results. These, like text ads, are placed either above or below the organic search. Unlike with Sponsored Search, advertisers cannot choose which keywords their products appear for on a direct basis. Instead, Google must make a current list of all products available on a regular basis, along with a wealth of additional information, so that they can be purchased through Google Shopping.
Google now decides for itself, based on these data, whether and which products are displayed in response to a search query. The CPC approach is also used for Google Shopping(Marqua, 2021).
2.2.5 Display Advertising
Ads, which are most commonly found in the form of banners on websites, are referred to as "display advertising", also known as "display marketing" or "banner advertising". It is also possible to use text advertisements instead of banners or videos. Following the acquisition of DoubleClick, a company focused on banner advertising, in 2007, for around $3 billion US dollars, Google's influence in display advertising grew significantly. In contrast to Sponsored Search, the advertising platform in this case must split the profits with the owner of the website where the ads are displayed. In the case of Google, the website's owner receives 68 percent of the profits. Google offers, in addition to CPC, the Cost-Per-Mile model (CPM) for display advertising, in which the advertiser pays a set amount for each 1.000 clicks instead of a per-click fee. The widespread use of these channels to increase brand awareness serves as a backdrop for the alternative pricing model. Display Advertising is frequently regarded as unrentable due to lower click- and hence directly generated sales numbers. However, studies show that combining Sponsored Search with Display Ads results in a significant increase in conversion rates(Marqua, 2021).
2.2.6 E-Mail Marketing
E-mail marketing is another appealing offshoot channel. With the consistent building of a subscriber list and the regular distribution of thoughtful or even personalized newsletters, it is possible to generate significant results. What is important to notice for a successful newsletter marketing campaign, a well-thought-out strategy is required. E-mail marketing is particularly interesting in terms of Customer Relationship Management (CRM) and the associated increase in Customer-Lifetime-Value (CLV)(Marqua, 2021).
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