Developing Digital Marketing

Relationship Perspectives

Park Thaichon, Vanessa Ratten, Park Thaichon, Vanessa Ratten

• Publisher: Emerald Publishing Limited
• Year: 2021
• ISBN:
  9781800713505
• Topic: Betriebswirtschaft
• Subtopic: Marketingforschung

Digital marketing has gained ascendancy as the modern communication method used by most organizations through its ability to transcend geographic restrictions. Developing Digital Marketing: Relationship Perspectives provides a holistic perspective about the role of digital marketing in the global economy. Each chapter offers a different perspective about the importance of digital marketing in the knowledge economy, helping readers to understand the shift from traditional marketing to more novel and innovative forms that are derived from digital marketing functions.
Themes explored throughout the book include:
•Service Encounters via Social Media and Customer Relationships •Digital and Organizational Storytelling •Artificial Intelligence and Customer Experience •Sustainability Project Partnerships
As the nature of these digital practices is evolving Developing Digital Marketing: Relationship Perspectives views the concept of digital marketing as now in constant flux, with the edited chapters paving the way to a better appreciation of how digital marketing is changing particularly through issues such as environmental sustainability in the current business environment.

Chapter 1

The Development and Current Trends of Digital Marketing and Relationship Marketing Research

Dung Le, Tuyet-Mai Nguyen, Sara Quach, Park Thaichon and Vanessa Ratten

Abstract

New information and communication technologies have transformed the ways businesses communicate and maintain relationships with their customers. In this chapter, we review the main topics in academic research pertaining to digital marketing and relationship perspectives. The discussion involves email and website marketing, search engine marketing, user-generated content, co-creation marketing, social media marketing, prosumption marketing in the sharing economy, immersive marketing and AI-based marketing. On this basis, the chapter proposes some future research directions including influencer marketing, live streaming, social service enhancement and the dark side of social media marketing, consumer-to-consumer interactions on two-sided platforms, psychological mechanisms related to the use of mixed realities, and the experience of AI-enabled service automation and relevant ethical issues. Furthermore, emerging technologies such as the Internet of things (IoT) and blockchain are expected to be the next breakthrough in marketing, which warrant further research to examine their impact on the customer-firm relationship. It is suggested the researchers could focus on the adoption and application of blockchain technology, participative marketing via IoT, as well as the privacy and data protection issues related to these technologies. This chapter provides a comprehensive picture of the connection between digital marketing and relationship marketing in academic research.

Keywords: Digital marketing; relationship marketing; online relationship marketing; relationship perspectives; technology; digital technologies

Introduction

Relationship marketing involves the development of strong relationships between exchange partners that enhance satisfaction, trust, value, commitment, and loyalty and ultimately improve profitability (Palmatier, Dant, Grewal, & Evans, 2006; Thaichon, Liyanaarachchi, Quach, Weaven, & Bu, 2019). Although there is increasing research in consumer or business management acceptance of new technologies and digital marketing (Thaichon, Brown, & Weaven, 2020), the impact of technologies and digital marketing on relationship marketing are often not adequately investigated, leading to overstated hypothetical predictions of its future potential (Thaichon et al., 2019).

In addition, the information and communication technologies (ICT) have transformed the ways businesses communicate and maintain relationships with customers. The booming development of digital technologies (i.e. the Internet of Things (IoT), Artificial Intelligence, deep learning) and smart devices (individual laptops, smartphones) empower businesses to effectively target micro-consumer segments and influence consumer behaviour (Dwivedi, Rana, Slade, Singh, & Kizgin, 2020). Therefore, understanding the connection between new technologies and relationship marketing is becoming even more important.

To map the development of digital marketing and relationship perspectives and provide a thorough review of research insights, we highlight some relevant trends in the composition of digital marketing in response to technological change, which leads to some predictions regarding the future of digital marketing.

Development of Digital Marketing and Relationship Perspectives in Academic Research

Along with the development of ICT, digital marketing research has focused on exploring consumer behaviour in the digital environment and relating the use of digital technologies to the outcomes of marketing actions. Fig. 1.1 shows eight main research streams in digital marketing since the creation of the Internet and the World Wide Web in the 1960s. Overall, marketing research has demonstrated how digital technologies can be effectively used for marketing purposes.

Fig. 1.1. Major Research Streams in Digital Marketing Over Time.

Email and Website Marketing

Early digital marketing research investigates how consumer visit websites and response to email advertising. A model proposed by Novak, Hoffman, and Yung (1996) incorporates the concept of flow experience to explain consumer browsing behaviour. Later, researchers modelled consumer website navigation based on the actual clickstream, emphasising learning effects, within-site lock-in, time constraints and cost-benefit trade-offs as critical factors to influence consumer decision to continue browsing more pages (or exiting) (Bucklin & Sismeiro, 2003). More importantly, there are various types of website visitors (buying, browsing, searching or knowledge-building) who response differentially to various marketing messages (Moe, 2003). Such typology allows businesses to design more effective and customised promotional message.

In addition to website marketing, email advertising has been widely used as a cost-effective marketing channel. For example, emails can generate positive word-of-mouth if they are forwarded to the receivers' network (Phelps, Lewis, Mobilio, Perry, & Raman, 2004) as well as increase website traffic (Ansari & Mela, 2003). However, companies are recommended not to overuse email communication because email targeting can also have a backfire effect (Ansari, Mela, & Neslin, 2008). Today, email marketing is in the danger of the overrun by unwanted commercial email (known as spam) and requires the application of appropriate mitigation strategies (Pavlov, Melville, & Plice, 2008).

Search Engine Marketing

The development of search engines such as Google, Yahoo and MSN in the 2000s provides marketers with a powerful tool to influence consumer behaviour which is more effective than offline advertising (Dinner, Heerde Van, & Neslin, 2014) and email marketing (Wiesel, Pauwels, & Arts, 2011). Research shows the spill-over effect from generic to branded paid search ads (Rutz, Bucklin, & Sonnier, 2012) as well as from traditional marketing channels such as TV advertising (Joo, Wilbur, & Zhu, 2016). More importantly, consumers acquired through paid searches tend to purchase more and thus creates higher lifetime value than consumers acquired by other marketing channels (Chan, Wu, & Xie, 2011).

Businesses receive keyword performance reports from search engine companies such as Google to evaluate the effectiveness of their paid search marketing based on some key criteria: number of clicks, click-through-rate, the average cost per click, conversion rate, etc. (Kannan, 2017). The position of search ads significantly influences consumer navigation. The click-through rate is higher for search ads on the top of the result page and decreases when the ads move down (Agarwal, Hosanagar, & Smith, 2011). The ad position is thus more important for smaller or unknown companies in influencing consumer behaviour (Narayanan & Kalyanam, 2015). However, the conversion rate increase with a lower position, suggesting that the topmost position is not necessarily the revenue- or profit-maximising position (Agarwal et al., 2011). This is because the conversion rate is more related to the presence of brand name and product information (Rutz et al., 2012).

It is worth noting that search engines offer organic versus paid listings of websites in response to the keywords used by consumers. Hence, businesses should consider both search engine optimisation to improve their organic ranking on the search engine results pages and paid search ads to gain more positive behavioural outcomes. Using a hierarchical Bayesian modelling framework, Yang and Ghose (2010) demonstrate that total click-through rates, conversions rates, and revenues in the presence of both paid and organic search listings are significantly higher than those in the absence of paid search advertisements. As consumers have become more proficient at advisement avoidance on the Internet (Seyedghorban, Tahernejad, & Matanda, 2016), a positive level of search engine optimisation may improve the search engine's ranking quality, the satisfaction of website visitors and higher marketing effectiveness (Berman & Katona, 2013).

User-generated Content (UGC)

The emergence of online review websites provides insightful data for companies to map their competitive brand positions in comparison with competitors over time (Tirunillai & Tellis, 2014). Also, social tagging data and developed tag-based metrics (i.e. brand familiarity, favourability of associations and competitive overlaps) can be used as proxy measures for brand equity and explanation of unanticipated stock returns (Nam & Kannan, 2014). Interestingly, offline marketing is beneficial in managing online reviews. For example, an increase in offline advertising is correlated with an increase in the volume of brand discussion and a decrease in negative reviews (Tirunillai & Tellis, 2012).

Early research to investigate the impact of online review reveals a close relationship between consumers' online reviews (including two dimensions: product evaluations and social dynamics) and sales (Moe & Trusov, 2011). In addition to organic electronic word-of-mouth (eWOM), businesses have also been proactive in generating their eWOM by encouraging less loyal customers, even non-customers to be involved in eWOM campaigns (Bu, Parkinson, & Thaichon, 2020).

A major challenge in managing UGC is the declining trend of the proportion of favourable ratings and reviews over time. The valance of online reviews has even higher elasticity (0.417) than the volume elasticity (0.236), in particular for private businesses (You, Vadakkepatt, & Joshi, 2015). There are several explanations for this downward trend of online reviews (Ying, Feinberg, & Wedel, 2006), which found that active reviewers, who consist of the majority of the online reviewer population, gave lower ratings than less active reviewers. In addition, customers seem to have lower utility from the product consumption and thus post lower evaluations over time (Li & Hitt, 2008). Finally, 5% of online reviews on a retailer's website is produced by non-customers who never purchase products and are often more negative than the average review (Anderson & Simester, 2014). This phenomenon of self-selection biases and deception need to be corrected in order to improve customer relationships with brands.

Co-creation Marketing

The concept of co-creation defined as ‘joint creation of value by the company and the customer’ (Prahalad & Ramaswamy, 2004, p. 8). In traditional marketing, the company creates valu...