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Marketing at Work 14.1 Marketing applications: from Angry Birds to Happy Marketers

Marketing at Work 14.1 Marketing applications: from Angry Birds to Happy Marketers

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CHAPTER 14 MARKETING IN THE DIGITAL AGE



495



Marketing of a game-app



Source: Alamy Images/Pumpkinpie.



is growing too rapidly to get a good fix, but Apple has

indicated that for its smartphones and portable devices

(iPhones, iPads) there were at least 1.5 million choices

by mid-2014. The online store (which itself is a piece of

software) only opened in July 2008. Arithmetic tells us

then that in about 2,200 days, the apps added to the list

of choices to buy from the store increased by 700 a day,

per day, every day!

Just because there are so many products to choose

from, it does not mean that people are buying them,

though, does it? Let’s check that out as well. How many

of these applications have been downloaded from the

store onto Apple devices? Note the word ‘downloaded’

rather than ‘sold’ – an issue we will come to later. Apple

does know that – it knows it perfectly. Apple recently

held a sales promotion with a large prize for the person

who downloaded the 50-billionth app. That digital music,

marketed through software portals like iTunes, has revolutionised the marketing and consumption of music is

surely beyond question. The rapidity with which the marketplace changed beyond recognition from what it was

even a decade ago has been breathtaking. One research

group has recently compared the growth in sales of digital

music with the growth in sales of apps. Music had a fouryear head start over apps, but apps have now caught up

and are accelerating into the distance.

If those are the headline figures, do we know anything

a bit more specific about how people are using and consuming apps? Indeed we do. One online collective has

examined this issue and has some tentative findings to

report:

1 A typical iPhone user has downloaded about 80 apps

to add to the 20 pre-installed by Apple.

2 Users spend upwards of 80 minutes a day using these

apps.

3 Just over two-thirds of the apps downloaded were

‘free’.



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App usage by category

Source: Appsfire.com



Having developed some focus and context, we can now

turn to some specific marketing related issues for gameapps and examine some specific examples of practice.

Where to start? How about channel strategy? If your

app is for an Apple device, there is only one choice – the

App Store as part of iTunes. Apple takes 30 per cent of the

price that the end user pays – and decides whether or not

it wants to retail the app at all – sometimes a problem if

your app contains adult-orientated material like sex, violence and profanity. In return for that substantial slice of

the pie, Apple hosts the app on its servers for download

and integrate it into the online catalogue, as well as managing feedback and payment.

If your business is involved with traditional physical

goods, the feedback you get from your channels can be

delayed, incomplete or inaccurate. This makes good decision making difficult. This is not true for apps. The graphic

shows the sales chart of a game called Flight Control – an

early success in the App Store. Most developers keep such

data close to their chests, but after time made it less commercially sensitive, Firemint was willing to share publicly.

As you can see, even with millions of copies sold, Firemint

knows exactly how many were sold overall, how many

in specific national markets and the impact of significant

events like a change in price, some publicity or even just a

release of an updated version. Within each market it also

knows its ranking in the sales charts. Similar data is available for country of sale. When you have this level of detail

and precision, making good decisions is easier.



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TABLE 14.1 Pricing of apps in the Apple App Store

Count by price – active apps

Month



Apps



Games



Total



% of total



Free



754,335



192,560



946,895



68.86



0.99



140,953



54,392



195,345



14.21



1.99



67,870



17,337



85,207



6.20



2.99



39,552



11,727



51,279



3.73



3.99



18,637



2,087



20,724



1.51



4.99



24,264



3,400



27,664



2.01



5.99



6,233



386



6,619



0.48



6.99



3,919



726



4,645



0.34



7.99



2,828



135



2,963



0.22



8.99



2,120



82



2,202



0.16



9.99



10,693



1,044



11,737



0.85



1,090,471



284,679



1,375,150



$1,572,202.64



$193,644.81



$1,765,847.45



$1.44



$0.68



$1.28



Total apps

Total cost to buy all apps

Average app price



Source: http://www.pocketgamer.biz/metrics/app-store/app-prices/



of the app is not even as simple as an on–off switch. The

After distribution and sales management, perhaps it is time

app creators might have adopted a pricing model called

to look at pricing. Further interesting things are happening

freemium – a word you will hear increasingly often in the

here as the nature of apps means that great flexibility is posfuture. Freemium means the app itself is free or very low

sible. The price of an app can be changed almost instantly,

cost to download, but once installed the user must make

meaning that price can easily be used as a promotional tool

what is called an in-app purchase to unlock portions of

or to establish a user base for future exploitation. Apps can

functionality. In game terms, this might mean extra levels

even be offered free via the Apple App Store. Why would

to play through for a few pennies, or new items for in-game

any company give away its product? There are some good

characters to be equipped with. This model is one which is

reasons. As just mentioned, the short- to medium-term

increasingly attractive with app developers as it means they

objective might be to establish a reputation or gain publicity and attention. Once achieved the

app can have a price change upwards.

Electronic Arts uses this tactic regularly.

Slashing prices across its range of games,

it quickly occupies most of the top 10

positions on the charts. After Christmas

or other seasonal events, when millions

of owners have just unwrapped their new

Apple devices, EA reaps the benefit from

its games being front and centre. Some

apps are deliberately released with only

a portion of the functionality operable.

If the user wants to get the full benefits,

then a payment must be made. If this

were a car, we might refer to that as a

test drive. If the app sample is not to the

liking of the user, then there is no cognitive dissonance – no money was wasted. Marketing of a game-app

This switching on of the functionality Source: Firemint.com



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can create a stream of revenue from each user, rather than

a one-off payment, and achieve this without the substantial

costs of developing an app from scratch.



Angry Birds – product and promotion

We have taken a very brief look at elements of pricing and

place in the context of app marketing. The basic framework

of the marketing mix has of course two further elements:

product and promotion. Before we finish, let’s consider

those – and do so in the context of possibly the most famous

game-app of all time – Angry Birds! An app by Rovio of Finland, it is an inaugural member of Apple’s App Hall of Fame.

Angry Birds has sold an astonishing 2 billion copies. No app

has sold more. In the global, all-time app hall of fame, Angry

Birds and follow-on products are at numbers 18, 10, 5 and

1. For context, WhatsApp is at number 6.

Let’s hear from an interview with the lead designer –

Niklas Hed – where the discussion turns to the ethos and

process of the games genesis and evolution:

Rovio was perfectly positioned to take advantage.

It had learnt a lot from the triumphs and failures of

its past games. It also had copious notes from focus

groups it had organised over the years, during which

Niklas and his colleagues had watched people playing games from behind a glass screen and recorded

what the players found difficult, what excited them,

what they found boring. The information from these

sessions had then been used to produce a blueprint

of the ‘perfect’ mobile game. The checklist ran to

several thousand words, but, one of the main things

they learnt was that each level had to feel achievable.

‘It’s important that players don’t feel that the

game is punishing them,’ Niklas says. ‘If you fail a

level you blame yourself. If the pigs laugh at you, you

think: “I need to try one more time.”’

They also knew it was important that any game they

designed could be played in short bursts – occupying

those periods of ‘downtime’, such as queuing for a coffee or waiting for a bus, that had formerly been devoted

to staring into space or, perhaps, reflecting on life.

‘You have to be able to play the game right away,’

Niklas says. ‘We didn’t want any loading times.’

It was this principle that led to the introduction

of the catapult, the game’s central feature. Players

know immediately what to do with it and it makes

the game more intuitive.

The game also had to appeal to both video game

‘virgins’ and hard-core enthusiasts. ‘We knew it had

to be simple but it couldn’t be too simple,’ Niklas says.

The promotion of the game was based on a very simple strategy. Rovio noted that Apple tended to highlight

apps in the store with strong colourful characters present



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in the game itself and imagery used in logo design. This

meant the characters in the game became front and centre in design – and the name became Angry Birds rather

than, say, Catapult. Examining potential partners to publish the game (games studios design and build, publishers

market) Rovio plumped for a company called Chillingo

which had a good relationship with Apple and a track

record of successful publicity campaigns. The strategy

worked; Apple selected the game as a highlight of the

apps in the store – that generated publicity which led to

downloads, which led to almost totally positive reviews

(word of mouth) between consumers, which led to more

sales and so on in a virtuous circle that has required next

to nothing in terms of traditional advertising expenditure.

Even more interesting than the way the game was

promoted is the way in which the game itself became so

strong as a brand that it has been used to help promote

other products and has even led to game-related merchandise – Rovio is selling a million plush toys and a million

Angry Birds T-shirts every month! There is even a tie-in

with an animated film called Rio. The clincher in respect

of Angry Birds now being a ‘transmedia franchise’? Angry

Birds being included as part of a promotion in a Super

Bowl advertisement. Look forward to the animated series!

So, has Rovio discovered the magic formula which it

can exploit to guarantee success time after time? Alas no.

Although follow-ups to the original Angry Birds apps like

Angry Birds – Star Wars sold very well to the huge base of

addicts, further releases have not done so well. A partial

return to the winning themes of Angry Birds with a game

called Bad Piggies flattered to deceive with very high initial sales that collapsed to a few thousand a day. Most

developers would kill for that level of success, but Angry

Birds has been installed more than a million times a day

since its release six years ago.

To have one mega-product, dwarfing all others in the

company portfolio, is a two-edged sword that many companies face – just ask McDonald’s about Big Macs and CocaCola about its red cans. So, perhaps marketing apps is not

completely different from normal physical products after all?

Sources: Case compiled from: Apple ‘The App Store Has Reached 50 Billion

Downloads’ from www.apple.com/itunes/50-billion-app-countdown, accessed July

2014; Stats on Apple App Store sales and pricing from PocketGamer at www.pocketgamer.biz/metrics/app-store/app-prices/, ‘Infographic: iOS Apps vs Web Apps’, from

blog.appsfire.com/infographic-ios-apps-vs-web-apps, accessed September 2011;

Chillingo, ‘About Us’, from http://www.chillingo.com/about.htm, accessed September 2011; Horace Dedieu, ‘More Than 60 Apps Have Been Downloaded for Every

IOS Device Sold’, from www.asymco.com/2011/01/16/more-than-60-apps-havebeen-downloaded-for-every-ios-device-sold/, accessed September 2011; Develop;

Firemint, ‘Flight Control Sales Per Week’, from firemint.com, accessed September

2011 and no longer available post-merger with IronMonkeys to form a new studio

– Firemonkeys at www.firemonkeys.com.au/

Interview segment from P. Kendell, ‘Angry Birds: The Story Behind iPhone’s

Gaming Phenomenon’, Daily Telegraph, from www.telegraph.co.uk/technology/

video-games/8303173/Angry-Birds-the-story-behind-iPhones-gamingphenomenon.html, accessed February 2011.

S. Pulman, ‘Angry Birds: Casual Gaming to Transmedia Franchise?’, from http://

transmythology.com/2011/01/17/angry-birds-casual-gaming-to-transmediafranchise/, accessed 2011.



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Using email and social media

A recent study of email marketing in Europe suggested that we get twice as many

commercial messages as work-related and personal emails combined – a result of the

estimated €2bn spent annually by marketers.38 To compete effectively in this ever more

cluttered email environment – not to mention the increasing sophistication of virus

blockers and other software – marketers are designing ‘enriched’ email messages – animated, interactive and personalised messages full of streaming audio and video. And

they are targeting these attention grabbers more carefully to those who want them and

will act upon them. Consider how Apple uses its weekly email – New Music Tuesday.

Around the world, millions of iTunes users receive an email that has been customised

to them individually. Apple does this by matching up the new releases that week with

records of who bought what from the iTunes Store, meaning that you are much more

likely to see news and links to music you would be interested in than if you had received

the same standardised email as everyone else. As with other types of online marketing,

companies must be careful that they do not cause resentment among Internet users who

are already overloaded with ‘junk email’. The explosion of spam – unsolicited, unwanted

commercial email messages that clog up our emailboxes – has produced consumer frustration and anger. According to one research company, spam accounts for as much as

90 per cent of all email.39

Email marketers walk a fine line between adding value for consumers and being intrusive.

Companies must beware of irritating consumers by sending unwanted emails to promote

their products. Legislation recently enacted across Europe and increasingly around the

world is requiring that marketers should ask customers for permission to email marketing

pitches. They should also tell recipients how to ‘opt in’ or ‘opt out’ of email promotions at

any time. This approach, known as permission-based marketing, has become a standard

model for email marketing.

More recently, the use of social media as a marketing tool has received a great deal of

attention. It is quite likely that you have your own Pinterest or Twitter profile – and you may

have devoted significant time to personalising it. One estimate about the use of Twitter suggests that 10 per cent of messages involve a brand name. As we saw in Marketing at Work 

14.1, social media are used by marketers for more than promotion – and online promotions

selected using the data volunteered by users can be a powerful promotional tool – just ask

Google and Facebook.



THE PROMISES AND CHALLENGES OF THE DIGITAL AGE

As we discussed earlier (see Chapter 3), understanding the marketing environment – the

context of business – is crucial for any organisation to survive, let alone thrive. Let’s then

take a look at some of the issues and problems and opportunities that the rise of the digital

age has caused.



New intermediaries

First – intermediaries. Earlier in the book the role of wholesalers, retailers and the like was

discussed in the context of having an impact on the operation of a company and the perception of it by consumers. New or evolved categories or intermediaries now exist. We saw

for example that Steam has revolutionised the way games are distributed (see Chapter 10),

and you’d have to be living in a cave not to have heard about iTunes and the impact that

has had on the music, film and TV industries. Companies like Priceline and Expedia – who

collate and aggregate deals from a spectrum of suppliers – have caused what is called price



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transparency – and this has had a tremendous impact on firms in the various insurance

industries, among many others. Google is a new intermediary for almost any organisation.

If Google is not hosting or matching your advertising then it will be the instrument consumers use to research about a particular product or organisation. Google is what you probably

think of when you think of search engines, but in other markets firms like Yandex (Russia)

and Baidu (China) hold sway.40

What new categories of intermediary are coming? The opening case on 3D printing suggested some possibilities in respect of home production of manufactured products.41



Society and culture

The digital age has had an undeniable impact on society and culture. Most of us would agree

that movie, sports and music stars have what might be called a personal brand – their public

image and perception. David Beckham is a past master at personal brand management.

Tiger Woods used to be. In your use of social media, have you been developing your own

personal brand? Choice of colours, choice of what information is made publicly available,

choice of images, choice of endorsements? Be careful – Microsoft sponsored a recent study

that found that many HR operatives are including a profile based on your social media use

in their evaluations of you as a job candidate.42 Some firms are exploiting the information

and user-generated content to make money – Flickr do it with images, YouTube with video

clips and Blogger with public diaries. Next time you’re on a forum, look at the adverts that

will be there in return for the space being provided – see Fark.com or the comments sections

at the Guardian or other newspapers. Other firms incorporate observed online trends into

their advertising, lolcats being one tragic example, and sometimes in sophisticated ways –

see Burberry.com and its ‘Art of the Trench’ galleries.43



Mass customisation and new markets



At Nike ID you can design an athletic shoe to

your personal specification – mass customisation

Source: Getty Image.



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The Industrial Revolution was all about mass production.

Standardisation. Many companies are now experimenting

with the possibilities that the Internet allows in respect of

what is termed mass customisation – products tailored to

specific requirements. The concept is not that new. Car manufacturers like Toyota have long had a system where the goal

is to build a car only if it has already been sold – and the

colour, engine size, fittings and model have been chosen by

the customer. Companies like Marks & Spencer are trying

this with clothing. The customer selects the design of the

shirt and the material it is to be made from. Further selections are made for collar shape, buttons and even whether

the garment should have initials. Once the information is

collected and the payment made, that specific shirt is made

for that specific customer. A leader in the concept of mass

customisation is Nike, which has a sophisticated online tool

for customers to design and build their own shoes and sports

clothing.

As the Internet presents new opportunities and challenges

to businesses, the same applies to not-for-profit organisations

like charities. The recent experiences of the International

Committee of the Red Cross are a good example of how the

Internet can impact across many marketing-related issues – see

Marketing at Work 14.2 for more on this.



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PART FOUR EXTENDING MARKETING



The International Committee of the Red Cross



MARKETING

AT WORK 14.2



Ann M. Torres, Marketing Department, Cairns Graduate School of Business and Economics, National

University of Ireland

The International Committee of the

Red Cross (ICRC), established in 1863,

is a neutral organisation that works

towards ensuring humanitarian protection. The ICRC, headquartered in

Geneva, Switzerland, operates in more

than 80 countries and employs more

than 12,000 staff. It is the world’s oldest non-religious organisation dedicated to humanitarian relief and it has

a unique place in international law; it

is identified by the four 1949 Geneva

Conventions as an impartial humanitarian body and is mandated by public

international law to assist victims of war

and violence.

The ICRC’s delegations and missions Thousands of Internally Displaced People (IDPs) gather in a field to receive

primarily employ nationals of the coun- food aid from the Red Cross near a camp for IDPs in the town of Kibati, just

tries in which it works to carry out a north of the provincial capital of Goma, on 5 November 2008. The

range of activities, such as assisting civil- humanitarian situation remained catastrophic in the North Kivu region,

ians, individuals deprived of their free- where over 1 million people had been displaced by fighting the week before

dom, dispersed families, the wounded Source: Getty Images/Roberto Schmidt/AFP.

and sick of existing or emerging conof new media to increase its reach – and a major part of

flict; preventive action through the cooperation with the

this effort has been in revamping the online presence of

national societies; as well as humanitarian coordination

the organisation.

and diplomacy. The ICRC and its societies work to uphold

The ICRC website (www.icrc.org) is among its most

seven fundamental principles: humanity, impartiality,

valuable communication tools – not only as a means

neutrality, independence, voluntary service, unity and

to communicate with the general public, but also as a

universality. The principle of humanity forms the central

central channel through which it can distribute informapurpose of the ICRC’s activities, which is ‘to prevent and

tion and reports to relevant audiences – without having

alleviate human suffering, without discrimination, and to

to rely on national governments. It is available in seven

protect human dignity’.

languages and consultation of the website continues to

As a consequence of its increased international presrise worldwide. Peak usage of the ICRC website typience, the ICRC has received more media attention, but as

cally occurs around incidents of extraordinary disaster

an organisation it is still poorly understood. In July 2001, a

or armed conflict – when the website hosts help and

review of the Red Cross brand in 15 countries by advertisadvice for victims and appeals to donors for help. Trafing agency Young & Rubicam found that while the ICRC

fic peaks in correlation with tragedies – Japan in 2011,

‘had a high status in all of the 15 countries, people weren’t

for example. In response to operational needs and public

sure what the Red Cross actually did’. Surprisingly, this

communication requirements, the ICRC continues to add

lack of understanding persists despite the fact the ICRC

new functions to its website, such as the launch of an RSS

has won four Nobel Peace Prizes. More importantly, the

feed – a system that makes it possible to deliver newly

ICRC began to reassess what it wanted to be known for.

published press releases and other documents directly

As a result, a greater portion of ICRC’s marketing commuto people’s desktops. Considerable efforts have also

nication efforts have been devoted to informing relevant

been made to improve the website’s editorial content

audiences, including the general public, by availing itself



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so as to ‘strengthen the ICRC’s positioning

as a global and independent humanitarian

organisation’.

Recently the ICRC’s Marketing Unit has

pursued a number of large-scale research

studies so as to develop its communication strategies and to raise ‘awareness and

influence attitudes on issues of importance’

more effectively. The ICRC has focused

on two areas of research: examining the

communication needs of key audiences,

regionally and globally; and measuring perceptions of and attitudes towards

humanitarian action, the humanitarian

environment, as well as the ICRC logo

and emblems. Much of this research has Source: Alamy Images/M4OS Photos.

been carried out more quickly at less cost

Afghanistan.’ The UEFA website also has a link to the ICRC

because of the Internet, and the medium is now a key

site and frequently provides information about ICRC

marketing tool in meeting these objectives.

activities online.

Indeed, the findings from the ICRC’s research studies

As it has learned to use the Internet more effectively,

informed its print, TV and Internet campaign strategy,

the ICRC has become a more sophisticated user of social

Abuse Grows Hatred. The multimedia campaign focused

media platforms. Twitter especially has helped with geton detention and emphasised the need to abide by the

ting campaigns off to a rapid and globalised start, and is

rules of the Geneva Conventions, which prohibit the

also an excellent means of distributing key info to those

abuse of detainees. The campaign goes further, stating

in sudden need of guidance – or as instant reinforcement

that abuse and torture perpetuate a cycle of violence. The

or rebuttals of points others have made. Facebook allows

animated film, created by the agency VCCP City, ‘dramadisseminating of images and longer form media which is

tises the point that the ill treatment of prisoners breeds

easily sharable and is a cheap and quick way of raising

hatred within the families, communities and countries of

awareness. By integrating itself into these social media

the imprisoned’ (VCCP 2006: 1). The Internet proved to be

networks, the ICRC is easily and cheaply able to place

by far the most effective and value-for-money medium

itself at the heart of our personal networks, obtaining the

through which to distribute this message worldwide.

attention and funds without which it cannot achieve its

Learning from this success, the ICRC, as the offiobjectives. This is what we are, and this is what we do – in

cial charity partner of UEFA for EURO 2008 and 2012,

real time.

launched an online fundraising campaign www.scorefortheredcross.org. The campaign in 2008 prompted

Sources: The ICRC can be found on Twitter@ICRC and on Facebook at https://www.

facebook.com/ICRC. Quotes and information relating to the ICRC example have

Internet users to make donations in support of the Red

been drawn from L.A. Casey and D.B. Rivkin, ‘Double-red-crossed’, The National

Cross, where each donation was transformed into virtual

Interest, 22 March 2005, No. 79, pp. 63–9; Department for International Development, ‘Working in Partnership with the International Committee of the Red Cross

goals for the donor’s favourite side among the 16 quali2002–2006’, 2003; D.P. Forsythe, The Humanitarians: The International Committee

fiers. The football team with the most goals would win the

of the Red Cross (Cambridge: Cambridge University Press, 2005); M. Griffin, ‘Emblem

Crossed Out by a Crystal’, The Age, 19 September 2005; International Committee

title of the Most Humanitarian Team of EURO 2008; the

of the Red Cross, ‘Discover the ICRC’, September 2005; ICRC, ‘ICRC 2005 Annual

campaign’s winning team turned out to be Germany, folReport’, May 2006; ICRC, ‘Emblems of Humanity: The International Red Cross and

lowed by Spain and the Netherlands. The proceeds from

Red Crescent Movement’, July 2007; ICRC, ‘ICRC 2006 Annual Report’, May 2007;

ICRC, ‘Study on Operational and Commercial and Other Non-Operational Issues

the campaign were designated for landmine victims in

Involving the Use of the Emblems’, October 2007; ICRC, ‘Score for the Red Cross –

Afghanistan and to local projects of the 16 European Red

Flash Video Spot’, May 2008; R. Murphy, ‘International Red Cross and Red Crescent

Movement: Lecture Notes’, 2007, The Centre for Human Rights, National UniverCross societies associated with the campaign: ‘This colsity of Ireland, Galway; Standing Commission of the Red Cross and Red Crescent,

laboration with the sporting world in a festive competi‘Strategy for the International Red Cross and Red Crescent’, November 2001; VCCP,

‘VCCP Creates Detention Ad for ICRC’, August 2006. The VCCP campaign’s animated

tion like EURO 2008 represents an opportunity for the

film may be viewed at http://www.icrc.org/web/eng/siteeng0.nsf/html/video-spotICRC. It lays the basis for raising the awareness of a large

detention-010706. The video spot for the ICRC/UEFA online campaign for EURO

2008 can be seen at http://www.icrc.org/web/eng/siteeng0.nsf/html/score-for-thepublic in a playful way about sensitive topics of humanired-cross-ytfilm-050508. The ICRC logo and emblems can be seen at http://www

tarian concern, such as the situation of mine victims in

.icrc.org/web/eng/siteeng0.nsf/htmlall/emblem?OpenDocument



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PART FOUR EXTENDING MARKETING



The Web’s darker side – legal and ethical issues

From a broader societal viewpoint, Internet marketing practices have raised a number of

ethical and legal questions. In previous sections, we have touched on some of the negatives

associated with the Internet, such as unwanted email and the annoyance of pop-up ads.

Here we examine concerns about consumer online privacy and security, and other legal and

ethical issues.



Online privacy and security

The nature, sustainability and protection of privacy in the digital world is an issue confronting all of us as citizens and consumers. Companies like Google and Facebook are in essence

nothing more than giant machines designed and built to harvest data continually from millions upon millions of users. The quid pro quo is ‘we provide the services you enjoy free of

charge, you provide us with your personal info’. We agree to this pact every time we log in

or do a search.

How sensitive is this issue for companies like Facebook? When we asked to include snippets of its privacy policy in this book – its nominally publicly stated privacy policy – we

were refused permission to do so. Why such sensitivity? If Facebook was restricted in what

user data it could collect, and was also restricted in what it could do with such data, for

example selling it on to other parties, what would the business be worth then? Would it still

be tens of billions?

Consumers are becoming increasingly aware about their data being harvested, sold and

used. Many are not happy, and want to see companies like Google and Facebook better regulated and controlled by legal frameworks that need to evolve significantly to take account of

the rapidly changing technological and social landscape. These concerns have led to pressure

groups being formed, and legal cases being brought before European courts. The Guardian

regularly reports on this issue:

Schrems is claiming damages of 500 euros (£397) per supporter in the courts in Vienna

for alleged data protection violations by Facebook, including over the US Prism spy

programme.

The action is being taken against the Irish subsidiary of the New York-listed web giant.

Schrems has been challenging the social network’s use of data through his Europe-vfacebook.org campaign and the Data Protection Commission in Ireland and has more than

20 active complaints of alleged data breaches filed with the watchdog.

The class action claims Facebook Ireland is in breach of European law on users’ data and

it violates rights by tracking internet use on external sites, including the use of ‘like’ buttons.

It also attacks Facebook’s analysis of users through what it calls ‘big data’ systems.

Schrems claims the company supports the Prism surveillance programme, the US secret

service’s worldwide monitoring and data mining exposed by the whistleblower Edward

Snowden.

Facebook has several weeks to respond to Schrems’s claims.

An earlier landmark battle launched in Ireland to find out what Facebook tells US spy

chiefs was referred to the European court of justice by a judge in Dublin last month.44



Many consumers also worry about online security. They fear that unscrupulous snoopers will eavesdrop on their online transactions or intercept their credit card numbers and

make unauthorised purchases. In a recent survey, eight out of ten online shoppers in the

UK were concerned about typing in their credit card details.45 In turn, companies doing

business online fear that others will use the Internet to invade their computer systems for

the purposes of commercial espionage or even sabotage. There appears to be an ongoing

competition between the technology of Internet security systems and the sophistication of

those seeking to break them.



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In response to such online privacy and security concerns, most national and supranational governments have attempted to legislate – but the technological and geographical

complexity of many issues is a legal minefield. If a shopper in Sweden is browsing the website of a company that is registered in Belgium but is hosted on a server in the Netherlands

and pays for her goods using a credit card registered in the UK from a Swiss bank, then

which laws do and do not apply if the goods are faulty, if the goods are illegal, if there is a

fraud? What taxes are payable? Which governments and agencies have access to personal

data generated by that transaction? That is a possible and relatively simplistic illustration

of some of the potential issues. Here is a recent example from the world of media:

Two British newspaper publishers have been fined in French courts because they violated

French privacy laws. The publishers were liable because the articles were viewed in France

on the Internet. Olivier Martinez, famous in the UK as an ex-boyfriend of Kylie Minogue,

sued Mirror Group Newspapers (MGN) and Associated Newspapers for breach of France’s

strict privacy laws after the newspapers published stories suggesting Martinez and Minogue

had recommenced their relationship, which had ended a year previously. The stories also

detailed their movements together in Paris earlier this year. MGN was sued because of an

article at sundaymirror.co.uk, while Associated was sued over articles at dailymail.co.uk and

thisislondon.co.uk. For each title the publishers were ordered to pay €4,500.

The Tribunal de Grande Instance de Paris rejected claims that it did not have the right to

hear the case. It had jurisdiction because the online versions of the articles were viewable in

France, it found. Though he was only awarded €4,500 per publication, Martinez had claimed

€30,000 in total in a series of privacy cases about articles making the same allegations.

His lawyer, Emmanuel Asmar, told out-law.com that French courts usually ordered small

payouts. The significance of the case was not financial, he said, but in the setting of a precedent that UK publications could be liable under French privacy legislation. ‘The big thing is

that for the first time the [court] considered that UK publishers are liable for their contents

in France since it is viewable here and the UK is a member of the EU,’ he said.

A related case from earlier this year was notable because it held one publisher responsible for material published on its site by another publisher via an RSS syndication feed. That

case was also taken by Asmar but on behalf of La Vie en Rose director Olivier Dahan. He

successfully sued three websites for publishing stories about him and actress Sharon Stone

via an RSS feed.

Martinez also won in a case against three websites earlier this year when a court ruled

that by publishing a link to offending material the blogs were liable for the privacy invasions

of that material.46



Of special concern are the privacy and safety of children. Social networking sites like

Bebo, Facebook and Myspace are increasingly being used not just by teenagers, but also by

younger children. On these sites they are exposed to advertising intended for older children

or adults, uncontrolled imagery in other users’ profiles and are potentially exposed to abuse

from peers and adults. Across Europe, efforts to mitigate these problems and promote safe

use of the Internet by children is led by INSAFE.47 This body, sponsored and endorsed by

the EU, is active on four main fronts in respect of online child safety – fighting against illegal

content, tackling unwanted and harmful content (whether images or software), promoting

a safer online environment and raising awareness among parents of online issues. Are such

efforts necessary? One group found that three out of four attempts by under-18 boys to buy

pornography and ‘18’ rated video games were successful, and that an increasing number of

teenagers were buying alcohol online.48

Many companies have responded to consumer privacy and security concerns with actions

of their own. To help foster customer trust, companies such as Expedia have conducted

voluntary audits of their privacy and security policies. Since 2000, Expedia has employed

PricewaterhouseCoopers to run privacy audits of its online services. Expedia’s privacy policy gives customers complete control over the use of the personal information they share



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PART FOUR EXTENDING MARKETING



with the online travel booker. Expedia also has an independent auditor regularly assess its

web security technology and procedures.49

Still others are taking a broadly industry-wide approach. Founded in 1996, TRUSTe is a

non-profit, self-regulatory organisation that works with a number of large corporate sponsors, including Microsoft and AT&T, to audit companies’ privacy and security measures

and help consumers navigate the Web safely. According to the company’s website, ‘TRUSTe

believes that an environment of mutual trust and openness will help make and keep the

Internet a free, comfortable, and richly diverse community for everyone.’ To reassure consumers, the company lends it ‘trustmark’ stamp of approval to websites that meet its privacy

and security standards.50

Other legal and ethical issues

Beyond issues of online privacy and security, consumers are also concerned about Internet

fraud, including identity theft, investment fraud and financial scams.

One common form of Internet fraud is phishing, a type of identity theft that uses deceptive emails and fraudulent websites to fool users into divulging their personal data. Some

of these messages are obvious attempts at frauds, other are more subtle or more credible

– seemingly using plausible email addresses or web links in order to catch the unwary. Even

though web users are becoming more sophisticated, a significant proportion of people can

be caught out.

Phishing also damages the brand identities of legitimate online marketers who have

worked to build user confidence in web and email transactions. Fortunately, companies

and governments are taking action. ENISA – the European Network Information Security

Agency – is an EU-wide body which coordinates efforts to prevent, address and respond to

network and information security problems.51

There are also concerns about segmentation and discrimination on the Internet. Some

social critics and policy makers worry about the so-called digital divide – the gap between

those who have access to the latest Internet and information technologies and those who do

not. They are concerned that in this information age, not having equal access to information

can be a social and economic handicap. Socially, lack of Internet access can be an issue for

those looking for jobs, somewhere to study, and those considering to whom to give their

vote. Economically, at an individual or household level, those who can afford a computer

and an Internet connection can browse at Amazon – perhaps saving £5 on a book priced at

£20 on the high street. Those without the access pay the high-street price – the rich pay less,

the poor pay more. Does that strike you as fair? You may recall from the beginning of this

chapter how degree and quality of Internet access was so strongly correlated with income

and education. This issue scales up across regions and nations – almost all of Europe is an

Internet literate and savvy society, used to viewing, evaluating and analysing vast quantities of data, but the same cannot be said for much of Africa and Asia. The eighteenth and

nineteenth centuries saw the Industrial Revolution in the West – should we now speak of

the digital revolution as the next step?

Despite these challenges and issues, companies large and small are quickly integrating

online marketing into their marketing strategies and mixes. As it continues to grow, online

marketing will prove to be a powerful tool for building customer relationships, improving

sales, communicating company and product information, and delivering products and services more efficiently and effectively.52



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THE JOURNEY YOU’VE TAKEN Reviewing the concepts

Recent technological advances have created a digital age. To

thrive in this digital environment, marketers are adding some

Internet thinking to their strategies and tactics. This chapter

discusses how marketers are adapting.

1 Discuss how the digital age is affecting both consumers and the marketers who serve them

Much of today’s business operates on digital information, which flows through connected networks. Intranets,

extranets and the Internet now connect people and

companies with each other and with important information. The Internet has grown explosively to become the

technology of the new millennium, empowering consumers and businesses alike with the blessings of connectivity. Of course, some groups are more blessed than

others.

The Internet and other new technologies have

changed the ways that companies reach and serve their

markets. The Internet enables consumers and companies to access and share huge amounts of information

with just a few mouse clicks. In turn, the Internet and

other digital technologies have given marketers a whole

new way to reach and serve customers. New Internet

marketers and channel relationships have arisen to

replace some types of traditional marketers. The new

technologies are helping marketers to tailor their offers

effectively to targeted customers or even to help buyers

customise their own marketing offers. It Is hard to find a

company today that does not have a substantial web

presence.

2 Explain how companies have responded to the

Internet and other powerful new technologies with

e-business strategies, and how these strategies have

resulted in benefits to both buyers and sellers

Conducting business in the digital age calls for a new

model of marketing strategy and practice. Companies

need to retain most of the skills and practices that have

worked in the past. However, they must also add major

new competencies and practices if they hope to grow

and prosper in the digital environment. E-business is the

use of electronic platforms to conduct a company’s business. E-commerce involves buying and selling processes

supported by electronic means, primarily the Internet. It

includes e-marketing (the selling side of e-commerce)

and e-purchasing (the buying side of e-commerce).



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E-commerce benefits both buyers and sellers. For

buyers, e-commerce makes buying convenient and private, provides greater product access and selection, and

makes available a wealth of product and buying information. It is interactive and immediate and gives the

consumer a greater measure of control over the buying

process. For sellers, e-commerce is a powerful tool for

building customer relationships. It also increases the

sellers’ speed and efficiency, helping to reduce selling

costs. E-commerce also offers great flexibility and better

access to global markets.

3 Describe the four major e-marketing domains

Companies can practise e-commerce in any or all of four

domains. B2C (business-to-consumer) e-marketing is

initiated by businesses and targets final consumers.

Despite setbacks following the ‘dot-com gold rush’ of

the late 1990s, B2C e-commerce continues to grow at a

healthy rate. Although online consumers are still somewhat higher in income and more technology oriented

than traditional buyers, the cyberspace population is

becoming much more mainstream and diverse. This

growing diversity opens up new e-commerce targeting

opportunities for marketers. Today, consumers can buy

almost anything on the Web.

B2B (business-to-business) e-commerce dwarfs B2C

e-commerce. Most businesses today operate websites

or use B2B trading networks, auction sites, spot

exchanges, online product catalogues, barter sites or

other online resources to reach new customers, serve

current customers more effectively, and obtain buying

efficiencies and better prices. Business buyers and sellers

meet in huge marketspaces – or open trading networks

– to share information and complete transactions efficiently. Or they set up private trading networks that link

them with their own trading partners.

Through C2C (consumer-to-consumer) e-marketing,

consumers can buy or exchange goods and information

directly from or with one another. Examples include

online auction sites, forums and web logs (blogs). Finally,

through C2B (consumer-to-business) e-commerce, consumers are now finding it easier to search out sellers on

the Web, learn about their products and services, and

initiate purchases. Using the Web, customers can even

drive transactions with business, rather than the other

way around.



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