In this lecture, we'll discuss digital advertising foundations in more detail. Digital advertising is not just for companies that are in online retail, but for every company no matter what business you're in. Let's start with consumer in mind. A consumer hasn't decide to buy a new product or a new service, goes through a series of steps, from becoming a non-buyer to a buyer. Psychologists and marketing professionals have studied this process in great depth. No matter which model you look at, all of us agree that a consumer does not go from being a non-buyer to a buyer in just one step. There are a series of steps. First step is attention, the next step is potential interest in the product of the service. After one goes through that step, there is a possible desire to buy a product or a service, and finally, the consumer takes action and either buys the product or doesn't buy the product. In any one of these stages, you may lose the consumers. So I think it's very important that we carry the consumer through all these stages of the decision making process; attention, interest, desire action. Oftentimes this is referred to as the AIDA model. If we split this process into two key steps or two key parts, the first three steps, can be classified as creating demand, and the last step, can be put as capturing demand. If we think of classic marketing, the demand is created by TV advertising, through billboards, through newspaper ads, and then the demand is captured or harvested through the use of coupons, end of aisle displays, shelf talkers in the store or an in-store sales person trying to convince a person, a potential buyer to buy a car or buy a new appliance. When we look at digital marketing, we have a set of tools available to us that are different than the tools available to a traditional market, and it has to influence a number of decisions. It has to influence the decision on whether to buy, which brand to buy, when to buy and where to buy. So whether to buy is whether I should buy this car or not, which brand to buy, is whether I should buy a Mercedes or a Toyota. When to buy, should I buy it today, this week or should I just postpone it till a month later, and then where to buy could be should I go to my local Mercedes dealer, or should I put a note out on the web to all Mercedes dealers in the area to see which one has the lowest price. All these are parts of the consumer decision-making process. The tools available to the digital marketer are different. So let's try to look at what those tools are first, and then see which part of the demand process they fit in. Whether they fit more in create demand or capture demand. So search ads. An example of a search ad could be, a person is thinking of buying a shoe, and puts in the search words, in either the Google or any other search engine of choice and say, "I want to buy a pair of shoes," and some results show up. Search engine optimization, is the process by which a company improves its website, so that they rank order in Google's mind is higher. You can put up display ads, you can put up social media ads, you can engage in retargeting campaigns and we'll talk about each of these as we go on, and many of you may already be aware of some of these. Email marketing, a company can put up a video of a person trying a new shoe and feeling good about it. You could have blogs and social media posts. You can have mobile apps and then you can also improve your conversion rate by trying different types of messages. Now, let's look at each of these tools that are at the disposal of the digital marketer and see whether they fall under creating demand or capturing demand. Search ads is predominantly to capture demand. Person is already thinking of buying a shoe. We are encouraging or optimizing the person to buy our shoe. Search engine optimization is very similar. We want our search result to show up higher, display ad is very similar. If you look at social media ads, it probably in my view does a little bit of both. But again, more towards capturing demand. Retargeting campaigns again is designed to capture demand. E-mail marketing can probably do both. Create demand as well as capture demand. Videos, blogs, and social media posts, are more towards creating demand but probably not as strong as TV ads. Apps can do both and conversion rate optimization is clearly to capture demand. Now if you look at each one of these tools available to for the digital marketer, it's not hard to see that much of digital marketing is geared towards capturing demand. Now as we think about this, there are some advantages of that. If we focus on capturing demand, we're focusing on results. Which is what most companies are concerned about is sales. We also have better measures, because we are focusing on some end goal, and if done properly can be very cost-effective. If not done properly of course no method is good. But it also has many disadvantages. It does not expand the market. People have argued through careful research that it is often poor at brand-building, it may not impact loyalty, and it also is what we call as a waiting game. The customer has to figure out whether they want to buy a shoe or not, and then we influenced their behavior by bringing them to our side. But we are not urging the customer it's time to buy a shoe. It's mostly when they have decided to buy a shoe, they come towards our site. So I think one of the challenges in digital advertising is, how does one go about designing holistic campaigns from start to finish, that don't just focus on capturing demand but also focus a little bit on creating demand? If we put it that way, then if we look at a sample customer journey in the buying process, a customer probably, let say there is a banner ad, the person clicks on the ad, visits the website, maybe fill a lead form, and then we'll follow up with the sales column. This is more for a business to business product or a service. But same thing could be done for a consumer product. A holistic campaign must include some top of the funnel messaging. It should also focus on conversion rate optimization through better A/B testing. So what do we mean by A/B testing? We try one messaging versus another. We can have one message which is more emotional, another message that is more rational. A rational message could focus on price comparisons, and emotional message could focus on how good the person looks in a shoe or how well does the shoe match with their other clothes. You'll also instead of doing A/B testing which is testing one variable at a time, there are instances where you can do multi-variate testing, and then you can also do campaigns segmentation. A holistic campaign also includes retargeting messages to those who have expressed interest by clicking on the ad can be sent, and there are very many methods to do that, there are many technologies available for us to do retargeting and then emails to those who submitted forms could also be used. Typical digital advertising is designed towards capturing demand. There is nothing wrong in that, capturing demand is very important. But one of the things we are trying to do to improve digital advertising is to create a better balance between creating demand and capturing demand. This is something that can be done in traditional marketing a little bit better and the aim is to do the same in digital marketing also.