The Most Effective Online Marketing Channels in the Daily Deal Industry. How Small Businesses Can Acquire New Customers in the UK and the US

Table of content

Abstract

Summary of dissertation by chapters

Acknowledgements

List of figures and tables

Chapter 1: Introduction
1.1 Research aim
1.2 Structure
1.3 Defining effectiveness
1.4 Benefits to academia and scope

Chapter 2: Literature review
2.1 Introduction
2.2 Types of online promotion channels
2.2.1 Website
2.2.2 Search Engine Marketing
2.2.3 Online public relation (PR)
2.2.4 Online Partnerships
2.2.5 Social media marketing
2.2.6 Online advertising
2.2.7 E-mail Marketing
2.2.8 Online viral marketing
2.3 The most effective marketing channel: numerical data
2.4 Conclusion

Chapter 3: Research Methodology
3.1 Introduction
3.2 Research philosophy
3.3 Research approach
3.4 Research strategy
3.5 Choices
3.6 Data collection
3.7 data analysis
3.8 Limitations
3.9 conclusion

Chapter 4: Data findings and analyses
4.1 Introduction
4.2 Collection of data through Google Analytics
4.2.1 Social and Direct
4.2.2 Referral
4.2.3 Organic
4.2.4 Affiliate and Paid Search
4.2.5 E-mail
4.2.6 Interpretation of results from MisterDrinkster's data collection
4.3 Supporting data collection; numerical and non-numerical
4.3.1 Search Engine Marketing
4.3.2 Email marketing
4.3.3 Social Media
4.3.4 Online Word of mouth and Referral
4.3.5 Online partnerships
4.3.6 Website and blogging
4.3.7 Online PR and Advertising
4.3.8 Guerrilla marketing and content marketing
4.4 Interpretation of analysis and conclusion

Chapter 5: Comparing findings with the literature review

Chapter 6: Conclusion

6.1 Limitations and future research

7 Personal Reflection

8 References

9 Appendices
Appendix 1 Definition of a small firm
Appendix 2 The daily deal industry
Appendix 3 Dissertation proposal
Appendix 4 Secondary research declaration
Appendix 5 Ethics approval
Appendix 6 Report log
Appendix 7 Description of MisterDrinkster

Abstract

It was identified that a framework, which small businesses in the daily deal industry could utilise as an online marketing guide and containing an overview of the most effective online marketing channels, was missing in the literature. The aim of this report was therefore to identify the most effective online marketing channels that small businesses in the online daily deal industry in the UK and USA can utilise to acquire new customers. The findings are based on data collected and analysed from a small daily deal firm, as well as numerical data from various sources and literature that focuses on effective online marketing channels in regards to the daily deal industry.

Based on these findings a framework containing the most effective online marketing channels was developed. It was concluded that a fully optimised website might be the most effective online marketing channel, followed by in- house e-mail, Search Engine Optimisation, Facebook, affiliate marketing, referral marketing and guerrilla/viral marketing. Other types of marketing activities can be initiated after these channels have been engaged, according to the framework.

It is intended that small firms in the daily deal industry can use the framework as a guideline to plan their own online marketing activities. Although care must be taken, as each firm is different.

Summary of dissertation by chapters

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Acknowledgements

I would like to show my gratitude to Hyseni Hajrë (my supervisor) for the help and support he provided during the research process. His guidance helped me to make significant improvements on the dissertation, which I very am grateful for. Furthermore, I would like to thank the CASE team at the University of Hertfordshire for helping me through important parts of the dissertation. Without their help I might not have been able to fully understand the underlying principles of research methodology. Lastly, I would like to thank Bahast Bakir and Isabelle Habegger for offering mental support throughout the process.

List of figures and tables

Figure 2.1: PR activities

Figure 2.2: Social media channels; by importance to company

Figure 2.3: Most used forms of social media platforms by size of enterprises

Figure 2.4:Total social referral visits by industry

Figure 2.5: Social referred visits

Figure 3.1: The research onion

Figure 3.2: Selected Research Methodologies

Figure 4.1: Assisted conversions

Figure 6.1: The most effective online marketing channels for small businesses in the daily deal industry

Table 2.1: Concept-centric versus Author-centric approach

Table 2.2: Online marketing channels

Table 2.3: SEM techniques

Table 2.4: Most used social platforms by users and marketers

Table 2.5: Effectiveness of online marketing channels

Table 3.1: Four research philosophies

Table 4.1: MisterDrinkster's online marketing channels on Google Analytics

Table 4.2: MisterDrinkster's online marketing channels

Table 4.3: Social; Sorted by most to least Transactions

Table 4.4: Social; Sorted by highest % of assisted conversions

Table 4.5: Referral; Sorted by most to least transactions (top 10)

Table 4.6: Referral; Sorted by highest % of assisted conversions

Table 4.7: Organic; Sorted by most to least transactions (top 10)

Table 4.8: Organic; Sorted by highest % of assisted conversions

Table 4.9: Affiliate; Sorted by most to least transactions

Table 4.10: Paid Search; Sorted by most to least transactions

Table 4.11: E-mail; Sorted by most to least transactions

Table 4.12: The most effective online marketing channels, Misterdrinkster

Table 4.13: Channels which people use to find deals

Table 4.14: Most effective online marketing channels for small daily deal firms

Chapter 1: Introduction

Nwankwo & Gbadamosi (2011:174) argue that "the internet is the fastest growing community in the world" and having an online presence is imperative if small businesses are to be successful. Statista (2015) builds on this argument and states that "40 per cent of worldwide internet users have bought products or goods online" and this trend is growing. These statements indicate the important role that e-commerce plays in enabling small businesses to reach potential customers. In a highly competitive market, small businesses ought to explore and implement the most effective online marketing channels in order to succeed (Ramon, 2013), including those in the daily deal industry. Businesses in this industry are offering customers the opportunity to purchase daily deals online (on behalf of merchants, such as restaurants and hotels), which gives them significant reductions on, for instance, restaurants and hotel stays (Donnelly, 2012). "Daily deals are prepaid deals, usually at a deep discount, in which you buy a product or service at a reduced price in advance" (Mintzer, 2013:7). These can then be redeemed by presenting the purchased deal upon arrival at, for example, a restaurant. See appendix two for a definition of the daily deal industry.

In relation to the online daily deal industry, a study by Mogul Media (2014) concludes that "63% of the customers stated that the digital coupons made the final decision for them when they were weighing out their purchases".

Furthermore, although some authors (Ardizzone & Mortara, 2014; Gross, 2013) have raised questions regarding the sustainability of this particular industry, others (Logan & Bright, 2014; O'Grady et. al, 2014; Boon, 2013; Shivendu & Zhang, 2013; eDeal Association, 2013; Donnelly, 2012) suggest that it is attractive for merchants, customers and daily deal sites, justifying the attention that it will be given as a dissertation topic.

1.1 Research aim

Based on the discussion above, this report aims to identify the most effective online marketing channels that small businesses in the online daily deal industry, in the UK and US, can utilise to acquire new customers (see a definition of a small

business in appendix one). Although various authors (e.g. Ryan, 2014; Rosenbloom, 2013; Chaffey & Ellis-Chadwick, 2012; Nwankwo & Gbadamosi, 2011) attempt to identify and produce frameworks by presenting a variety of effective online marketing channels, these are rather general and not specific to small businesses in the online daily deal industry. Nevertheless, one source (Mintzer, 2013) has been identified who concentrates on the daily deal industry. However, because Mintzer's work is not only related to marketing it only presents some of the marketing channels that can be utilised, and is not presenting any framework either.

Therefore, it can be argued that there is a gap in the literature that needs attention. Thus, there is a need for a comprehensive framework which will show small online daily deal companies the most effective online marketing channels to acquire new customers. Consequently, this research paper aims to produce such a framework. In order to achieve this aim, the following objectives are established throughout various chapters in this report:

Objectives:

1) To identify the most effective online marketing channels that any kind of business (regardless of their industry) can utilise to acquire new customers.
2) To identify and analyse the most effective online marketing channels that small businesses in the online daily deal industry can utilise to acquire new customers.
3) To produce a framework that contains the most effective online marketing channels which small UK and US-based daily deal firms can utilise to acquire new customers.

In order to meet with these objectives, the following research questions will be answered throughout:

Research questions:

1) What are the general and most effective online marketing channels that any business can utilise to acquire new customers?
2) What are the most effective online marketing channels that small daily deal businesses can utilise to acquire new customers?
3) Are there any differences between the channels identified in the literature review and those that exist in the daily deal industry; and, if so, what are they?

1.2 Structure

The first objective and research question will be dealt with in chapter two. Next, chapter three will outline and discuss the research methods used in this dissertation. Based on the conclusions that will be reached in the literature review, chapter four will collect and analyse data related to the daily deal industry in order to answer the second objective and research question. By reaching a conclusion in chapter four, regarding the most effective online marketing channels that small daily deal industry can utilise, it will be possible to answer the third research question, in chapter five. The report will be concluded in chapter six, which contains a complete framework as described earlier.

1.3 Defining effectiveness

It is important to clearly define how the effectiveness of online marketing channels is to be measured in this dissertation. Teo (2005) and Kierzkowski et al. (1996) argue that effectiveness of online marketing channels does not only need to be measured in revenue, but also in, for instance, brand building and customer relationship. However, this research paper considers effectiveness in the form of the marketing channels that contribute to the highest number of customers obtained (driving sales). Thus, a study by eMarketer (2013) concludes that driving sales is one of the most important goals for digital businesses, such as daily deal firms.

1.4 Benefits to academia and scope

This research paper intends to benefit academia and the daily deal industry by providing a framework (end result) that can be utilised by small daily deal firms as a guideline to help them plan their online marketing activities.

Furthermore, the scope of this dissertation is limited to 12,500 words and approximately three months. This might potentially reduce the validity of the results, as it could be argued that more data could have been collected if more time had been available.

Chapter 2: Literature review

2.1 Introduction

It was argued in the previous chapter that no framework exists which shows small businesses in the daily deal industry the most effective online marketing channels to obtain new customers. However, it is possible to identify online marketing channels that any kind of business can utilise (without considering possible differences across various industries) because much literature on these channels already exists. It is important, first of all, to view these so that an overview of the most effective channels can be gained. On this basis, the following objective is established:

1) To identify the most effective online marketing channels that any kind of business (regardless of their industry) can utilise to acquire new customers.

This objective will be dealt with by establishing and answering the following research question:

1) What are the general and most effective online marketing channels that any business can utilise to acquire new customers?

Once an overview is gained, it can be compared with the results in the findings chapter later on, which is related to identifying the most effective online marketing channels that small businesses in the daily deal industry can utilise to obtain customers. Thus, by comparing the results from the findings with the literature in this chapter, it can be concluded whether some online marketing channels are more or less effective in the daily deal industry than in the general case.

In order to carry out the literature review, a concept-centric (Webster & Watson, 2013) approach is utilised. Thus, unlike an author-centric approach, which reviews literature by focusing on the author, the concept-centric approach reviews literature by considering different concepts/themes; which in this situation would be for instance, Search Engine Marketing (SEM), online partnerships or social media marketing. Table 2.1 below helps to clarify the distinction between these two concepts. The reason for not choosing the author-centric approach is because - unlike the concept-centric approach - it "fails to synthesize the literature" (Webster & Watson, 2013:16), which is an important part of a good literature review (Saunders et al., 2009).

Table 2.1: Concept-centric versus Author-centric approach.

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Source: Adapted from Webster and Watson (2013:16)

2.2 Types of online promotion channels

Several authors (Ryan, 2014; Chaffey & Smith, 2013; Tsai, 2013; Scott, 2013; Kritzinger & Weideman, 2013; Chaffey & Ellis-Chadwick, 2012; Hanafizadeh & Behboudi, 2012; Wylie, 2012; Nwankwo & Gbadamosi, 2011; Jarboe, 2011; Kietzmann et. al, 2011; Spais, 2010, Charlesworth, 2009; Scarlat & Maxim, 2009; Newlands, 2009) have identified various online marketing channels that businesses (regardless of their industry, and in some cases, company size) can utilise to obtain customers. These are summarised in table 2.2 below and each is discussed in the coming sections.

Table 2.2: Online marketing channels.

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2.2.1 Website

Ryan (2014), Wylie (2012) and Shah and D'Souza (2009) argue that the website is a central element/channel in any marketing strategy, linking all other channels; perhaps making it the most important online marketing channel (Camusio, 2011). They argue that before starting to utilise any other channels, it is imperative that the website, among others, is user friendly and its design reflects the brand that is being established. However, a study by Kuo and Chen (2011) concludes that not only a user friendly and well designed website is imperative for creating a successful website, but equally important are factors such as security, level of online service, delivery security, informative content and loading time (Al-Qeisi et al., 2014). The importance of a website as a marketing or sales channel might therefore explain why many authors (for instance Lou, et al., 2012; Hernández et al., 2009; Kalbach, 2008; Rich, 2008) initiate comprehensive studies to understand and explain the importance of implementing the different elements correctly, so that, for instance, both the conversion rate and brand image can be raised.

The discussion above suggests that, although a website might be one of the most effective online marketing channels, it is important to understand how its many elements are implemented. If these are not fulfilling customer needs they might, negatively, affect the message that a business is sending to its customers; thus affecting the effectiveness of the website (MacDonald, 2011).

2.2.2 Search Engine Marketing

Despite the discussion above, it is important to point out that a website is worth nothing if it does not generate traffic, which leads to a discussion about Search Engine Marketing (SEM). This is another online marketing channel that the literature (for instance, Moran & Hunt, 2014; Kennedy & Lauksson, 2012; Shih et al., 2012) points out is important. Kritzinger and Weideman (2013:276) state that SEM is "a form of Web marketing that seeks to promote websites by increasing their visibility in search engine result pages".

On this basis, Stokes (2008) concludes that two forms of SEM exist; search engine optimisation (SEO), which leads to organic results being listed in search engines, and pay per click (PPC), which are paid ads that appear in search results (Wylie, 2012). In addition, Kritzinger and Weideman (2013) conclude that contextual advertisements, digital asset optimisation (DAO) and paid inclusion are also SEM techniques. However, it can be argued that these additional techniques can fall under either SEO (organic) or paid placement (PPC). For instance, Baines et al. (2012:303) argue that DAO is a form of SEO, or in other words "SEO 2.0". Therefore, for the sake of this discussion and because many authors only distinguish between organic (SEO) and paid placement (PPC) techniques, only these two terms will be discussed. Table 2.3 below summarises the different SEM techniques.

Table 2.3: SEM techniques.

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Source: Kritzinger and Weideman (2013)

Although both SEO and PPC are widely acknowledged as effective online marketing channels some authors (for instance; Berman & Katona, 2013; Killoran, 2013; Beal & Strauss, 2008) conclude that SEO is the most effective form of SEM for two reasons. Firstly, people who make the searches are more likely to click and put greater trust in organic results than paid results. Secondly, PPC is more expensive for marketers, whereas SEO is a free technique (Stokes, 2008).

However, although SEO might be the most effective SEM technique many businesses, especially small ones, do not have sufficient knowledge about it, and thus, not able to effectively implement various SEO techniques. Kritzinger and Weideman (2013) agree with this and further argue that PPC campaigns are more effective than SEO because they are quicker and easier to control, measure and improve. Nevertheless, when only click rates are considered as an efficiency factor, SEO might be considered as the most effective. Thus, Towers (2012) concludes that "paid search only accounts for 6% of total clicks from search engines versus natural search at 94%". Although this number contradicts Chaffey and Smith (2013), who argue that paid listings account for 1/3 of clicks, it can still be concluded that consumers prefer organic search results.

Most of the above-mentioned authors agree that SEO tends to be more effective than PPC in acquiring new customers.

2.2.3 Online public relation (PR)

Various authors (Scott, 2013; Hayes et al., 2013; Catriona, 2011; Phillips & Young, 2009; Brown, 2009) agree that online public relations can be very effective in obtaining new customers. Scott (2013) argues that the internet has made PR a significant channel for businesses to utilise. Solis and Breakenridge (2009) build on this, concluding that online PR is one of the most powerful and trustworthy forms of online marketing. However, online PR covers a plethora of techniques or activities that can be utilised. See figure 2.1 below.

Figure 2.1: PR activities.

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Source: Chaffey and Smith (2013: 379)

Catriona (2011) argues that press releases are the most used, and perhaps most effective from of PR, especially when sent as a newsletter to people who have signed up for them, and this argument is backed up by Scott (2013). However, Phillips and Young (2009) argue that press releases are only effective if published by sites and bloggers with many readers/highly ranked websites. For small businesses it might be challenging to establish relationships with these (Pakroo, 2014).

Furthermore, Papasolomou and Melanthiou (2012), Verhoevena et al. (2012) and Solis and Breakenridge (2009), argue that online PR, through social media, is a growing and effective trend; among others because of the potential of news going viral, and because it helps businesses to create a relationship with relevant audiences.

Although all of the techniques (depicted in figure 2.1 above) might be effective, it is difficult to conclude which are the most effective. Therefore, it can be argued that an empirical test (by utilising the different techniques and measuring them with, for instance, Google Analytics) might be the best option to determine which of the PR marketing channels are the most effective for a given business (Stokes, 2008).

2.2.4 Online Partnerships

Kunitzky (2011) argues that online partnerships are an important part of a company's marketing mix and should be utilised as an online marketing tool; as they might yield exceptional results. They are defined as a "deal between two (or more) parties where the desired outcome is a win-win for all concerned" (Ryan, 2014). Chaffey and Smith (2013) conclude that three forms of online partnerships exist (link building, affiliate marketing and sponsorship) and advise all types of businesses to engage with each of these.

Again, it might be difficult to conclude which are the most effective. Thus, it can be argued that persuading relevant and high quality/highly ranked websites to link to a business could help to improve SEO and thus attract many visitors to the website (Ward & French, 2013). However, it can be argued whether small business, compared to large ones, are able to persuade highly ranked websites to link to their websites, perhaps undermining the effectiveness of this technique in some cases (Ryan, 2014).

Ryan (2014) and Leal (2013) argue that affiliate marketing is one of the most effective forms of online partnerships. Thus, merchants (advertising websites) only pay the affiliate (for instance aggregators, review sites and blogs) when they bring customers to the merchant's website; in other words; pay per performance (Klapdor, 2013). Furthermore, Goldschmidt et al. (2003) argue that users consider affiliate websites trustworthy, perhaps indicating that advertising on an affiliate website could be an effective way to obtain new customers.

However, despite the above mentioned sources' positive outlook towards the effectiveness of affiliate marketing, Edelman and Brandi (2014:1) argue that "affiliate marketing is neither as easy nor as safe as proponents initially anticipated". They argue that it might be difficult for advertisers to find affiliates that can generate a sufficient number of customers compared to the commissions they are charging. Furthermore, their discussion regarding affiliate fraud also identifies several cases, where affiliates use illegitimate techniques to earn their commissions. Although this might be true in some cases, there arguable must be affiliates that justify the commission they are charging. Furthermore, Chaffey and Smith (2013) provide examples of companies where affiliate marketing does not have any effect, including Dabs.com, which experienced no decrease in sales when they stopped all their affiliate marketing initiatives.

Finally, sponsorship can also be utilised as a marketing channel to obtain new customers. Although it is difficult to conclude whether sponsorship is more or less effective than other types of online partnerships. Klapdor (2013) and Ryan and Whiteman (2000) agree that it is generally seen as more trustworthy and effective than online banners and adverts, which might be because sponsorship ads are placed in sites relevant to the advert’s content (Hanafizadeh & Behboudi, 2012).

2.2.5 Social media marketing

The effectiveness of social media marketing as a marketing channel is discussed by among others Gould (2013), Scott (2013), Castronovo and Huang (2012), Evans (2012) and Kietzmann et al. (2011), all agreeing that it is one of the fastest growing and effective marketing channels. On this basis, Gould (2013:3) defines social media as "digital tools for sharing conversation and content". Moreover, Smartinsights.com (2015) has carried out a model (see figure 2.2), depicting an overview of the many types of social media channels and their importance to a company.

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Figure 2.2: Social media channels, by importance to a company.

Source: Smartinsights.com (2015)

Lee (2014) concludes that Facebook, Twitter, LinkedIn, blogging and YouTube are the most frequently used forms of social media platforms (by marketers). A more comprehensive list, also depicted in Lee (2014), shows the social platforms most used by both marketers and users. A section of the list is illustrated in table 2.4 below.

Table 2.4: Most used social platforms by users and marketers.

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Source: Lee (2014:62)

An older study by Kietzmann et al. (2011) agrees with Lee (2014), but especially points blogging is an effective channel because of its popularity with users (readers) and the ease with which bloggers can create and maintain a blog. Furthermore, the work of Shewan (2014), Dugan (2013) and Taylor (2013) also seems to be in agreement with Lee (2014), confirming that Facebook, Google+, YouTube, Twitter, LinkedIn and Tumbler are all effective platforms to utilise as marketing channels. Lastly, statistics from the European Commission conclude that the most used form of social media by businesses in 2013 were social networking platforms, such as Facebook and Twitter (Europa.eu, 2013). See figure

2.3 below.

Figure 2.3: Most used forms of social media platforms, by size of enterprises.

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Source: Adapted from Europa.eu (2013)

However, although all the above-mentioned platforms may be excellent platforms for marketing purposes, a report carried out by Adobe (2014) shows that Facebook is generating the highest revenue per visit and the most dominating social media platform compared to other social media platforms. Moreover, the report concludes that the effectiveness of social media marketing varies in different industries, which might explain why some marketers conclude that it is not always effective (Lee, 2014). Thus, as can be depicted from figure 2.4 below, social media platforms refer the greatest number of consumers to the media and entertainment industry/websites.

Figure 2.4: Total social referral visits by industry.

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Source: adapted from Adobe (2014:10)

Finally, the report concludes that Facebook is the platform which generates the highest traffic to both B2C websites and B2B high tech firms (see figure 2.5).

Figure 2.5: Social referred visits.

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Source: adapted from Adobe (2014:11)

Even though many social media platforms might effectively help businesses to obtain customers, most of the literature seems to point towards Facebook being the most effective platform.

Finally, it is important to point out some of the criticism that platforms, such as Facebook, have received. For example, Dekel (2014) criticises Facebook's promotion campaign that businesses can use to obtain ‘likes’ for their pages. He argues that, despite paying Facebook for each of the likes they obtain, businesses risk getting these likes from fake profiles. Furthermore, Dekel (2013) concludes that whenever a business posts a video, this is only delivered to a small proportion of the people that have liked the page, and the business then needs to pay Facebook before their remaining audience is able to see the post. Consequently, even social platforms that the literature sees as the most effective have their limitations (Brown, 2009).

2.2.6 Online advertising

Several authors (e.g. Boone & Kurtz, 2015; Kalbach, 2008; Wang et al., 2002) argue that the efficiency of online advertising, especially online banners, is low compared to other types of online marketing channels. For example, Boone and Kurtz (2015) conclude that the response rate for online advertising (0.5%) is lower than the response rate for direct e-mails (1.5%). Thus, reviewing the work of the above-mentioned authors, the following are the reasons why online advertising might not be effective as an online marketing channel:

Low click through (people who click on the banner).

High cost per purchase (people who purchase after viewing the banner) compared to other forms of online marketing.

Banner blindness (that people ignore or do not recognise the banner). Can be annoying for viewers.

Nevertheless, Taylor (2013) states that many forms of online advertising exist (e.g. display ads, rich media ads, search marketing ads, social media ads) and argues that the effectiveness of each of them varies (Shimp and Andrews, 2013). Nevertheless, Boone and Kurtz (2015) and Shimp and Andrews (2013) argue that search marketing is one of the most effective forms of online advertising. Furthermore, Shimp and Andrews (2013) and Michael and Salter (2008) conclude that high affinity ads including video advertisement, rich media advertisement and newer forms of display ads, such as real-time bidding combined with remarketing, are also becoming more effective types of online advertising because of their ability to show individualised advertisements. However, concern about intrusiveness (tracking users online in order to be able to present individualised ads) and the annoyance factor are raised as growing problems (Shimp and Andrews, 2013). Moreover, Taylor (2013) argues that if advertising campaigns on social media are set up correctly, effective results can be obtained.

2.2.7 E-mail Marketing

Most of the literature seems to be in agreement about the effectiveness of email marketing. Thus, Ryan (2014), Roberts and Zahay (2013), Carmen and Nicolae

(2010) and Cases et al. (2010) all agree that it is one of the most effective online marketing channels. On this basis, Brogan (cited in Newlands, 2011:164) states that "only 5% of people have a relationship with a brand through social media, whereas 95% of people have a relationship with a brand through email marketing".

Although the 5% related to social media may have risen since 2011, Brogan's point of view may still justify the effectiveness of e-mail marketing. Moreover, the results of two different surveys by Ascend2 and Gigaom (in Olenski, 2014) conclude that e-mail marketing is the most effective online marketing channel, followed by website/blogging and SEO. They both agree with a third survey, carried out by Daily Deal Media (Gunelius, 2013), concluding that 71% of respondents (14,000 US-based merchants) believe that e-mail is the most effective online marketing channel for them.

However, the level of effectiveness might depend on which type of e-mail is used. Thus, Chaffey and Smith (2014) point out that the following opt-in email types exist:

- House list e-mails (in-house).
- Cold (rented e-mails).
- Co-branded e-mails.
- Ads in third party newsletters.

Roberts and Zahay (2013), Newlands (2011) and Groves (2009) argue that house list e-mails (for example, sending newsletters to e-mails obtained from a company's own website or blog) receive the highest response rate and, suggest this as the most effective form of e-mail marketing.

2.2.8 Online viral marketing

"Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence" ( Thrivelearning Institute Library, 2014). According to Wilde (2013), guerrilla marketing, network marketing and leveraging the media are all synonyms for viral marketing. Furthermore, videos, images, texts songs and e-mails are just some of the items that can "go" viral (Scott, 2013).

The, reviewed literature is therefore in agreement about the effectiveness of viral marketing, arguing that it can be an extremely effective way of acquiring new customers (Scott, 2013; Wilde, 2013; Ho and Dempsey, 2010; Yang, et al., 2010). However, Grimms (2014) and Scott (2013) argue that most viral marketing campaigns fail, and no matter how much effort is put into a campaign, its success is never guaranteed. This suggests that viral marketing is more about luck than following pre-defined theories or techniques. Nevertheless, Scott (2013:121) has carried out a list of factors, summarised below, that a viral marketing campaign should aim to fulfil.

- Creating content worth sharing.
- Realising that no coercion is required - people will share content worth sharing.
- Making the campaign freely and easily sharable.
- Being involved in communities where people are actively sharing content.
- Creating content not seen before (uniqueness).

Compared to the work of the Thrivelearning Institute Library (2014), these factors seem to be in agreement. Finally, a study by Berger and Milkman (2012:1) argues that although viral marketing campaigns are an effective marketing channel, not all of them reach a sufficient amount of success. It concludes that "content that evokes high-arousal positive (awe) or negative (anger or anxiety) emotions is more viral. Content that evokes low-arousal, or deactivating, emotions (e.g., sadness) is less viral". The above suggests that if online viral marketing campaigns are designed by following these instructions, they may have a greater chance of success and therefore be far more effective.

2.3 The most effective marketing channel: numerical data

The discussion carried out in this chapter covered various marketing channels that businesses can utilise to acquire new customers. However, the discussions were based on the work of different authors and did, in the majority of the cases, not consider numerical data. Therefore, this section will consider some of the most recent figures that have been found (five different sources), concluding the most effective forms of marketing channels. These are summarised below:

Table 2.5: Effectiveness of online marketing channels.

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As this dissertation measures effectiveness in terms of acquiring customers, it can be argued that the figures provided by Gigaom (2014) and SimilarWeb (2014) might not be useful, as they consider other effectiveness factors. These are therefore not considered. Although there might be a relationship between "customer retention", "mostly used channel to search" and "customers acquired", this is not considered by this dissertation.

Comparing the above figures with the viewed literature in the chapters 2.2.1 to 2.2.8 they generally seem to be in agreement. Here, it was argued that e-mail marketing, SEO and websites/blogs might be the most effective marketing channels to obtain new customers. These three channels score the highest numbers when compared to the data in figure 2.9. The highest scores in each row are highlighted in blue. Furthermore, according to the figure, referral marketing is one of the effective channels.

Nonetheless, the limitation of the obtained data is that it does not consider all of the online marketing channels covered in chapters 2.2.1 to 2.2.8. Furthermore, the effectiveness factor, which is discussed above, also seems to result in a deviation when the different sources in table 2.5 are considered. For instance, social media scores a relatively high number, according to Olenski's (2014) numbers, compared to the figures of Mckinsey & Company (2014) and Custora, (2013). However, this might once again be due to the effectiveness factor, which is not made clear by the authors.

2.4 Conclusion

This chapter's aim was to gain an overview of the different online marketing channels that any business can utilise to obtain new customers. An objective and research question was therefore outlined at the beginning of the chapter, which is endeavoured answered below, based on the reviewed literature. Therefore, a tentative conclusion could be that the following online marketing channels are generally the most effective in obtaining new customers:

- SEO
- In-house e-mail marketing
- Website
- Viral marketing (if the campaign is successful)
- Facebook

This might suggest that businesses should firstly engage in these online marketing channels before moving on to other channels. However, it is important to present the views of Ryan and Jones (2011), arguing that each business has to measure their own online marketing activities in order to conclude which online marketing channels are the most effective for them. What might work for one company, might not work equally well for another.

Having concluded and answered the research question outlined in the beginning of this chapter, it is possible to compare these conclusions with the ones in the findings chapter later on. Based on this, it is possible to establish the following objective:

To identify and analyse the most effective online marketing channels that small businesses in the online daily deal industry can utilise to acquire new customers.

This objective will be dealt with by establishing the following research questions, which will be answered in chapters four and five:

What are the most effective online marketing channels that small daily deal businesses can utilise to acquire new customers?

Are there any differences between the channels identified in the literature review and those that exist in the daily deal industry; and, if so, what are they?

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