Digitalisation in business using the example of Mobile Marketing

Viktoriia Bulatnikova

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Digitalisation in business using the example of Mobile Marketing

09/07/2023| By

Viktoriia Bulatnikova

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Marketing

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Marketing

Abstract

This research paper will address some aspects regarding digitalisation of business with an emphasize on mobile marketing as well as provide some examples of the businesses that are currently existing and operating in the era of rapid technological progress.

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«Digitalisation in business

using the example of Mobile Marketing»

Viktoriia Bulatnikova

viktoriia.bulatnikova@fh-bielefeld.de

Date: 12.06.2020

Course: Mobile Marketing

Professor: Dr. Riza Öztürk

Introduction 3

Digital Business 4

Digital Marketing and Mobile Marketing 5

Digital Trends in Business and Marketing (Mobile marketing) 9

Challenges and opportunities for digital business and mobile marketing 16

References 20

Introduction

Without any doubt, we live in a fascinating, rapidly evolving world with technology changing and revolutionizing our lifestyle in general. What seemed unreal or impossible some time before is now being widely put into daily practice. Technology has become an integral part of our live. Just for the example: in 2019 the number of devices connected to the network reached 26,66 billion units. By 2025 this number is estimated to increase by approximately 3 times (75,44 billion units)¹. It becomes clear that the digital transformation will affect absolutely all the spheres of our life soon.

This also applies to the way we do business nowadays as the modern business environment is constantly adapting to a highly digital economy. Technologies create a new business model and new markets where freelancers, sole proprietors and enterprises are provided with new revenue and value-producing opportunities. With the onset of a digital era businesses have started thinking beyond what they are doing now.

Inarguably, marketing, being a crucial business tool used to create demand and maintain long-lasting relationships with the customers, supports and contributes to a successful digital business. Particularly when marketing goes mobile it creates a fresh insight which in combination with modern technology only gives the conventional form of market new awareness or business understanding of a digital dimension.

Digital Business

The growth in the volume of data and in the number of physical devices that can generate information alongside with global mobility and availability of resources are the key preconditions that have contributed to digital transformation of business. The world is stepping into the era of the Internet of Things (IoT) – a borderless ecosystem of physical devices, vehicles and appliances that have the ability to connect, collect and exchange data over a wired and wireless network, with little or no human-to-human or human-to-computer intervention. The gradual transition to this concept forces businesses to resort to new models and processes especially in industries that are closely related to the consumer as digitalization paves the way to new customer values.

Digitalization and IoT particularly are essential to business. These “disruptive technologies” enable companies to automate processes and reduce labour or supply chain costs as well as utilize resources effectively. In terms of marketing activities, digitalization provides specialists with a high-quality data and delivers real-time insights to monitor consumer behaviour and deliver better customer experience. As a powerful leverage, it allows companies to create fundamentally new value chains, come up with and promote more profitable and useful products.

According to MIT Sloan Management two-year study of 400 large firms², it turns out that the companies that adopt technologies and that are considered digitally mature are outperforming their competitors in producing more profits (+9%), more revenue (+26%) and more shareholder value (+12%). McKinsey reported in turn³ that the share of digital business made up for 34% of global GDP by 2020. Thus, it can be safely assumed that the potential for business development today is largely determined by disruptive technologies and digitalization.

Digital Marketing and Mobile Marketing

Marketing has always been about connecting with the customers in the right place at the right time. Yet, since the way people shop has changed a lot due to Internet usage, offline marketing has become less effective. Today, businesses are to meet clients where they are already spending time: on the Internet. Accordingly, marketing also goes online and becomes digital. This encompasses all marketing efforts that use an electronic device or the Internet. Businesses leverage digital channels to connect with current and prospective customers and find new ways to reach clients online, because almost everything can be a digital marketing asset: a website, branded assets (logos, icons), video content, images, written content (blog posts, product descriptions), online tools (interactive content), reviews or social media.

Digital marketing is fundamental for business and brand awareness. By embracing some aspects of digitalization, companies gain valuable competitive advantage and attract customers, because consumers are now expecting and relying on digital content to learn about brands. Furthermore, due to endless possibilities and options associated with digital marketing, firms can experiment with a variety of marketing tactics on a budget and use tools like analytics dashboards to monitor the Return on Investment (ROI) of advertising campaigns more effectively than with a traditional promotional content.

It is also crucial to mention that marketing goes mobile (and resorts to advertising activities that promote products and services via mobile devices) because a smartphone becomes, probably, the most personal device for a regular person. The main advantage here is that mobile marketing audiences are grouped by behaviours and not by other factors. This is because mobile marketing makes use of features of modern technologies, including location services or search history, to tailor marketing campaigns based on an individual´s location and personal preferences so that the customers can get what they need exactly when they need it, even if they are on the go. These marketing campaigns can be more targeted, immediate, interactive and specific to the individual user, and, therefore, more effective in implementing marketing activities. According to Statista study conducted in 2018, 52,2 % of online traffic worldwide is generated via smartphones. In addition, mobile already eclipsed desktop usage in 2014, but this is just the beginning:

Users spend 89% of their time in mobile apps, which makes mobile devices the leading means of communication;
Smartphones speed up shopping time by 20%⁴;
Compared to 2019, in 2020 50% of mobile device users prefer instant purchases directly from their smartphones⁵;
2/3 of customers who use smartphones are likely to buy from a company that has an app or mobile version of the site, and the content is configured according to their location and preferences;
40% of online transactions are made on mobile devices.

In order to integrate digital (and mobile) marketing into business processes, there are some common tactics, or strategies, that can be resorted to:

Search engine optimization (SEO) – the practice of increasing the quality and quantity of website traffic by increasing the visibility of a website to users of a search engine. SEO refers to the improvement of unpaid, or organic, results and excludes paid promotions. Mobile SEO, in turn, is the tactic for improving the reach that a company´s website can have on a mobile phone. The impact to the website and high ranking in “blended” search results can be obtained through on-site factors (keywords) or off-site factors (links from high quality sites pointing to yours). SEO (and mobile SEO) is one of the most effective practices in digital marketing nowadays because if the website is not ready for mobile transformation, it prevents future mobile customers from finding it in the first place. Considering that 75% of users ignore the paid advertisement and 80% of users never scroll to the second page, the role of SEO (mobile SEO) seems incredibly essential.
Content marketing that covers the creation of content assets (blog posts, eBooks or infographics) to build brand awareness, drive clicks, traffic and sales.
Social media marketing (SMM) – the practice of promoting content on social media. Without any doubt, social media has become one of the most influential channels that impact customer´s decision: for instance, three-quarters of Facebook users and half of Instagram users check these platforms daily⁶, which makes these channels ideal for placing ads, while increasing brand awareness and generating leads for a business.
Pay Per Click (PPC) – a method of driving traffic to the website by paying a publisher every time one ad is clicked. The most common type of PPC is Google Ads, which allows to pay for top slots on Google´s search engine results pages at a price “per click” of the placed links. PPC can be named an effective tool because you are reaching the people you want to reach whenever and wherever you want to reach them. Display ads can be shown on specific websites that relate to your business, and search ads appear at the top of the search engine results.
Email marketing – a way of communicating with the audience used to promote content and direct people towards the business´s website. The types of these emails include subscription newsletters, welcome or follow-up emails and loyalty program offers. This tactic is extremely popular: 93% of B2B marketers use email to distribute content, 78% of them have seen an incredible increase in email engagement over the last 12 months and more than 59% of marketers state that email is their biggest source of ROI⁷.

It is also important to mention that there are strategies that are specifically adopted to and commonly used on mobile devices. The main ones include app-based marketing and in-game marketing with advertisement integrated into mobile interface or organically appearing on it (Pictures 1,2), QR codes which take users to a specific webpage that the QR code is attached to, SMS that involves sending text offers to a user, mobile image or search ads, and location-based marketing including ads that appear on mobile devices based upon a user´s location relative to a specific area or business.

Pictures 1,2. Example of an in-game mobile marketing ad

It can be safely assumed that digital marketing is primarily a mobile experience nowadays. Businesses are optimizing their websites to make them mobile-responsive, because if it is impossible to navigate on mobile, they will end up alienating a significant percentage of the web traffic. It is crucial to have the mobile features specifically designed to facilitate effortless experience. One thought-provoking idea here is to assume that businesses should offer their clients marketing on mobile first and then adapt their strategy for desktop as needed.

Many businesses have already implemented mobile marketing for their advantage, which brought them good substantial profits and new clients. For instance, Red Roof Inn hotel chain ran a mobile search campaign with a location-based message “Stuck at the airport?”, which increased last-minute bookings by 60%. KLM Airlines created a responsive campaign page that displayed the dwindling number of available discount vouchers. This led to 17% increase to visits to KLM´s mobile website. The campaign generated 34% more bookings and 38% more mobile revenue. And Nissan, for example, created an interactive video, which allowed users to tap touch screen to load more info about car features. This campaign resulted in 78% completion rate and 93% engagement⁸.

Digital Trends in Business and Marketing (Mobile marketing)

There is no denying that the development of any business is based on an understanding of the main directions towards which the industry is moving. This chapter is dedicated to the latest digital trends that are currently driving businesses and particularly marketing activities.

Artificial intelligence (AI) has been widely put into practice. Being integrated in business algorithms, it helps to accelerate sales and retain customers. Understanding the sequence of clients´ actions, a company warms up their interest and direct them to a purchase. First the communication scenario is configured, and then the program works automatically. For example, when customers register on a website, the program sends them a message with a gift or a discount. Communication scenarios can be set up once, and sales will be generated for years.

There is one real example I would like to give here. Janssen Cosmetics (the professional cosmetics brand) has provided up to 15% of the contribution to the annual growth of its business in Russia through a chain of five automated emails⁹. In order to increase trade turnover, Janssen Cosmetics created an automated series of welcome emails. At the initial stage, Janssen sent brand content (personal promocodes or product offers) to new customers, while offering a gift for registration. The next three emails focused on issues relevant to the target audience. In the final letter, the company offered the opportunity to get a free set of cosmetics, as well as to make an appointment with a cosmetologist. In this way, Janssen wanted to stay in touch with the client as long as possible. As a result, welcome mailings increased the turnover by 2% and contributed to the annual business growth by 15%.

As the business goes online, the guarantee of confidentiality is another important aspect and the key to success. Any leak of user data undermines trust in companies because people have become increasingly concerned about how their personal information is used and whether it is protected. One interesting fact is that young audience (aged 16-34) often views their personal information as an asset for which they can get something from the company in return, such as full access to content or services. According to a survey conducted by WebIndex¹⁰, users are willing to share personal data with online companies only if they trust them (53%), have the ability to access and delete data at any time (46%) and understand why and what for the information will be used (45%).

Chatbots and virtual assistants have also become a must have for business and marketing activities. Users like it when they can solve all their problems within one ecosystem (a social network or a search engine). Besides, there are some users who only use messengers on the Internet, and communication with them is only possible via Viber, WhatsApp or Telegram. In this situation, the universal solution is to use chatbots, as they give businesses the opportunity to instantly respond to user requests and notify them about products and services. Since the clients does not need to wait for a response, it reduces the chance that the customers will go to the competitors. In addition, according to Google, 65% of users in the world will prefer to communicate with brands for the first time via chatbots, rather than brands representatives (Picture 3).

Picture 3. Example of a beauty salon´s chatbot

Major brands are also experimenting with augmented (AR) and mixed reality (MR) – technologies allowing users to add virtual objects to a real environment. For example, IKEA has an application called IKEA Place, where customers can virtually place a piece of furniture from the company's range into the interior and see whether it fits or not (Pictures 4,5). Also, if they like some element of some interior, the app will help to find a similar one among IKEA products. This allows the company to develop e-Commerce. Certainly, especially for advertising and sales this technology seems like a breakthrough, but everything depends on the speed of the Internet connection and the complexity of installing such devices.

Pictures 4,5. IKEA Place mobile application

The next trend is mobile specific and refers to SMM. “Stories” on social media are taking off. Snapchat messenger was the first one to introduce the “story” format in 2014. Facebook, Instagram and WhatsApp have all added this feature since then¹¹ (Figure 1). There seems to be a lot of business opportunities here. One in three respondents, who were interviewed by Instagram, said that they became interested in a brand or product after seeing it in “stories”.

Figure 1. Growth of the “Stories” format

Another mobile specific trend is the increasing popularity of applications. When considering mobile time, it is overwhelmingly dominated by app consumption – over 80% of all mobile time. From a user´s perspective, they make life more convenient, from a company´s perspective they provide more opportunities for increasing sales and revenue as well as building customer loyalty and retention than physical stores or desktop e-commerce. The appropriate example here is ASDA (supermarket chain) mobile app that has been downloaded 2 million times¹². Mobile purchases now account for 18% of all online orders with a shopping frequency that is 1.8 times higher than desktop.

It all started with a desire to simplify the purchase process by promoting itself as brand providing customer-oriented services. To implement this, ASDA created a free app that allows users to shop more quickly and conveniently (Picture 6). The customers can also choose the items that interest them on the app, scan the barcode to add them to a shopping card and see the nearest ASDA supermarket on the map where they can buy a product they are interested in. The main reason why this application has become so popular is that it offers a broader user experience – not only purchasing services, but also useful daily life information.

Picture 6. ASDA mobile application

Today we also see the increasing role and power of reviews. They are considered as a source of transparent marketing because they are written by customers without company´s participation, and they give other customers first-hand information about what you offer. According to Bright Local¹³ (Figure), in 2017, 85% of people trusted online reviews written by other consumers as much as they trusted recommendations from personal contacts, which were up from 84% in 2016 (Figure 2). In addition, people say that they read 10 online reviews on average, and then decide whether they can trust the company.

Figure 2. Results of the Bright Local survey

The last trend I would like to describe here is “influence marketing” that has seen an incredible rise recently. Many brands have started to attract bloggers to online promotions on a regular basis. And there are objective reasons for this: about 90% of consumers trust influencers (bloggers) more than advertisers and celebrities, and more than 30% of users consider bloggers to be quite reliable sources of information because in them people see the reflection of themselves and their lives¹⁴. By engaging thematic bloggers with a relatively small number of subscribers, the brand gets an audience with interests almost completely corresponding to the blogger's topic. Any company that promotes niche products designed for narrow audience segments can benefit from this: select social media influencers in accordance with the product or service sold and attract them to the promotion. According to statistics, “microinfluencers” (up to 10,000 subscribers) have “macroengagement” (meaning a higher engagement rate – the ratio of the number of likes, reposts, and comments to the total number of subscribers. The growth of this figure indicates that the publication attracts more attention from the audience and, consequently, the effect of it is higher). These influencers are 4 times more likely to get comments on a post than bloggers who are read by 10 million people or more¹⁵ (Figure 3).

Number of subscribers	0 – 1,000	1,000 – 4,000	4,000 – 100,000	>100,000
Engagement rate	9.7%	4.5%	2.4%	1.7%

Figure 3. Instagram Engagement rate

The example I would like to give here is my friend´s blog on Instagram. She initially decided to promote her mini business through Instagram and offer her services to a loyal and interested audience. She teaches English online and makes custom masks (photo or video filters) for various businesses on Instagram. In order to promote her blog and make her subscribers grow, she has resorted to targeting via Instagram – a method that involves breaking the audience into segments and then concentrating marketing efforts on one or few key segments consisting of customers whose needs and desires most closely match the product or service offerings. The main advantage of this method is that a user can start promoting posts from the Instagram commercial account or Facebook profile and spend a reasonable amount of money (starting from approximately 1.5€). Summarily, this is how it all really works (Pictures 7-12):

Audience configuration: you choose the city/country, age and gender. But the most important parameter here is “detailed targeting” where you can set the interests of the audience, their occupation, marital status, children, and much more.
Determination of the budget and schedule for displaying ads: you choose a budget for the entire duration of the promotion and set the launch date of the campaign.
Placement selection for the ad: you edit placements so that the advertising campaign is seen on the particular websites. By default, it shows up everywhere: on Facebook, in Instagram, Messenger and even in the advertising network of Facebook partners.

Pictures 7-12. Instagram targeting model

Challenges and opportunities for digital business and mobile marketing

Digitalization of business and marketing sector particularly is still a disputable issue because there are some obvious challenges. Firstly, massive amounts of data can be an issue, as companies need to figure out a way to store, track and analyse vast amounts of information that will be generated. For digital and mobile marketing, it also means that this information needs to be put and structured via numerous channels that companies carefully choose in order to implement the strategy successfully and manage resources reasonably. It is vital to understand that there are certain channels for conveying each type of communication (Picture 13¹⁶). Knowing which channel is best for each type of message or campaign and taking a multichannel approach to reach the customer are the keys to success.

For example, web/mobile push notifications (which are brief, attention-getting messages that brands can use even if the recipients are not currently using the application) are a great way to convey urgent information. In-app/browser messages are better suited for pushing active customers to carry out desired actions or deepen their engagement with the brand. The oldest of the messaging channels, email, is a powerful channel to reach customers with urgent communications and new content. Finally, news feed cards are an outreach channel perfect to deliver rich content to active customers without requiring them to opt in.

Picture 13. Customer messaging channels

Needless to mention that all the wearable tech (that appears to replace smartphones in the future as the most personal device) also comes with a lot of data, and it can be seen that brands are getting more adept at logging, analysing and interpreting data so as to better market customers different products and services (Figure 4).

Figure 4. Consumer adoption of wearable tech up to 2020

Secondly, digital future may be an issue for privacy and data protection. For instance, many users approve a privacy policy without reading it, and many of these policies are vague guidelines where it is completely impossible to foresee what will happen after people consent to the processing of their data. The problem is that the consent to this agreement is mandatory in order to access some service or enter the website. Consequently, users have no choice if they want to use it. Furthermore, the service provider may shift privacy standards and change the policy. In December 2012, Instagram was at the heart of a scandal because it said it had the perpetual right to sell users' photos for advertising purposes without payment or notification. Due to the strong reaction, Instagram had to back down¹⁷. Thereby, personal data protection should be a vital aspect that all the businesses should take into consideration. This is especially important for B2B: along with an in-depth study of user data, companies must ensure that this data is protected for their partners and customers.

Thirdly, it is still unclear how the labour market will be affected. Digital transformation seems to both cut jobs and increase inequalities. It is even predicted that soon every fourth firm will face the risk of disappearance due to digitalization¹⁸. The good example here is telecommunication industry which is likely to be the first transformed one. There has been a job loss of approximately 90% in this sector in just 15 years. And within the next two decades, half of the current job profiles can grow obsolete.

Considering the sphere of mobile marketing, it can be also said that the chatbots that are widely used in apps are also replacing live specialists. But that is where the controversy arises. The main weakness of chatbots is that they are usually set up for standard situations. If the dialogue goes off track, the bot can start making mistakes and therefore annoy the client. For sales and marketing, it is rather a hype than a long-term trend as bots do only part of the work, but it is often a live consultant who finishes a purchase. In addition, there is a concept called “psychology of selling”. The point is, to start getting more clients and sales, companies need to understand why their prospective customers behave the way they do, what they are thinking, and how they can act in the desired direction. To reach the result, marketers and sales assistants put to work some mental triggers, such as evoking reciprocity or arousing curiosity. Certainly, to influence customer´s decisions more effectively, it is easier to resort to live communication, however, the idea of a sales bot that is always in touch and immediately answers any question looks very promising.

Returning to the last point, it is important to ask a question whether digital transformation initiatives change and create jobs. The answer is definitely “yes”. New technologies pave the way to new products and services – and hence to new occupations. I would like to give an example of two new digital marketing professions that are already in great demand. The first one is the Head of mobile product development. The thing is that mobile advertising is one of the most attractive investment sectors of digital advertising. According to Statista, mobile's share in the global digital space will make up 60% of advertising expenses¹⁹. The demand for developing mobile marketing products already exceeds the supply. The market needs people who can work with mobile sites, apps, and platforms as well as understand the specifics of mobile interactivity. The second occupation in demand is Performance manager. In the next 3-5 years, almost all the business will be reconfigured to digital reality. Performance managers are required to operate effectively in the new environment. They evaluate financial and time indicators, user activity and the contribution of each employee to the development of the company. This job requires knowledge of digital business models, the basics of “disruptive” technologies and digital marketing, the ability to work with data and create a user experience, as well as the ability to interact with the team.

Frankly speaking, when it comes to mobile marketing, things are more or less certain. “Mobile-first” trend is turning into emerging “mobile-only” mindset. The industry is maturing and there is no doubt that it will soon be developing by leaps and bounds. With the advent of more feature-rich mobile devices, the infancy of the Internet of Things and more sophisticated analytics, the mobile industry is only limited by creativity and imagination.

All in all, digital technologies are increasingly affecting our daily lives and bringing the lasting change to the business world: technology changes the way brands analyse customer data and interact with their audience and customers, in turn, become more experienced and expect truly personalized content. Since this is unavoidably going to happen, it is crucial to be engaged in a broad-based and unbiassed discussion about the effects and the outcomes of digitalization. We must admit that digitalization is an opportunity for business – but only if businesses do it right, improving existing processes, investing in some insanely futuristic technology as well as thinking about the society in new ways and gaining a new understanding of work and labour.