Digital Marketing evolution is one that is filled with astonishing technological wonders. Even Darwin would enjoy this chronicle. Did you know that Digital Marketing has been around for more than 120 years, but the actual term “Digital Marketing” was coined only about 30 years ago!
You heard it correct.
According to the greatest Gujarati of our times (clue: Not Mukesh Ambani 🙂 )…. Neil Patel, we can trace the origins of Digital Marketing to 1896, the year when radio was invented. Yup, Marconi invented radio and soon marketers used it to sell products after it is adopted by the masses. And our digital marketing evolution starts from here.
Digital Marketing is defined as any form of marketing of products or services that involves electronic devices.
And radio definitely fits the bill. For that matter even television and phones (part of Digital offline marketing). From simple things like Radios to complicated systems like re-targeting, Ad networks, demand side platform, chat-bots, real-time bidding…….. know how Digital Marketing evolved and how it is shaping up.
Evolution of Digital Marketing
Evolution of Internet
In early 1962, an American psychologist J.C.R. Licklider of MIT, talked about a concept known as Galactic Network. He envisioned a globally interconnected set of computers through which everyone could quickly access data and programs from any site. In spirit, the concept was very much like the Internet of today. At that time mainframe computers required for computation were few and very expensive and it made sense to share resources between different agencies. This idea of ‘resource-sharing’ network first emerged in ARPA (Advanced Research Projects Agency – US) in 1966 and the world that saw the creation of the ARPANET. This was a US government funded project (mostly for defense needs) that drove the construction of a communications network that would scale vast distances.
ARPANET helped “interconnect” smaller isolated networks into one giant network. Hence “Internet”. Research on its design commenced in 1973 and the network became operational in January 1983. For the first two decades of its existence, it was the preserve of a technological, academic, and research elite.
Today, the Internet stands for two things in the minds of the masses: First, a technology that enables computers to communicate around the globe and second: Social media.
All through this time the development of computers was still at an experimental stage. In 1981 IBM brought the world the first PC with a price of $1500 and memory less than your smallest song in MP3 format (just 50KB). But even with slow memory you could hook up to a television, play some games and even process some text.
Businesses were excited about this new toy and understood the immense possibilities. One of the first applications was digitizing customer and prospect information. Businesses would call or mail prospects and update interactions into a centralized system that can be relied upon. In fact a company called Act in mid 1980s came up with software that gave rise to the sales force automation platform and eventually it turned into today’s customer relationship management systems. Marketers also had a new way to communicate to customers i.e. email and to this day it is one of the most profitable and efficient channel.
Web 1.0 / World Wide Web
At that time, Web 1.0 platform was developed to help users find out their necessary information. But, it did not allow them to share this information over the web. This time the marketers and the experts are unaware the uses of digital marketing. They were not sure whether their strategies would work or not because at that time the internet had not yet seen widespread deployment. The term “Digital Marketing” was first invented and used in the year 1990.
In 1991, Tim Berners-Lee and his team launched the World Wide Web project. Graphical web browser was created in 1993 at the University of Illinois Zen labs. It was called Mosaic and its components would later be taken to market as Netscape navigator. In fact, WWW did not break any ice until the first successful mass-market browser, Netscape, was released in 1994. Microsoft soon got into the game with Internet Explorer and suddenly just about everyone was online.
Then, in 1993, the first clickable web-ad banner went live. At that time, HotWired purchased a few banner ads for their promotion and advertising. This marked the beginning of the digital marketing era and Digital display advertising.
In the following two years, the number of people using the web soared from 16 million to 70 million.
Consumers and businesses alike jumped into anything and everything that had to do with the internet realizing the virtual possibilities that the future would hold. Suddenly there was a web page for every product and services out there and marketers realized that consumers now had access to all the information they would need to make new kinds of buying decision in a new kind of purchasing cycle. Since so many sites had come up, websites had lot of space to give ads. Just like a billboard on the road, to generate revenue every website was offering ad space. This ad inventory just got bigger with more websites and increasing traffic on the internet. People initially loved clicking on the ads, and marketers loved buying these ad properties and this only fed to the internet bubble.
Anyways, the dotcom companies got bigger and bigger and just after the new Millennium (circa 2001 – 2003) Dot com Bubble Burst. Companies with no sustainable business models were wiped out and the few that survived lost more than 80% of their value. Almost overnight the market for banner ads collapse as too much add inventory was available compared to its value. Suddenly no was clicking on the banners.
Going back a few years, in 1994, some new technologies (First e-commerce transaction was done over the internet) were invented and entered the market with a new mission. Yahoo was also launched in this year. Within one year of its launching, it received 1 million hits. Yahoo changed the definition of digital marketing. Search engines became the de facto gateway to anything to be found online. The companies optimized their websites so that they can get a better rank in search engine and this is the birth of Search Engine Optimization.
Enter, a shiny new boy and a defining moment in digital marketing evolution. It had one simple page, with a logo, a search box and 2 buttons. Google was born in the year 1998 and in the year 2000, Google realized that search can be monetized. It launched first web version of AdWords.
Google search engine was the only one that displayed short text ads related to the search term. Security of Google search engine results allowed the advertisers to target the messages. Keyword based Pay per click was born with reliable way to measure. And this is the genesis for PPC or SEM.
With search engines becoming an easy way to reach even those websites that served long tail keywords portals and directory such as MSN and Yahoo that aggregated information were bypassed.
Web 2.0 – The social web
Web 2.0 refers to websites that emphasize user-generated content, ease of use, participatory culture and interoperability for end users. Better infrastructure provided ever more bandwidth, storage and computing power. The web changed from a place to present static information to a platform for interaction. This also marks the entry of Social Media as we call it. SixDegrees was the first social media site, but users started to participate when social media sites LinkedIn (2002), Myspace (2003), Facebook (2004) and Twitter (2007) came into picture. Huge amounts of data was created with people uploading pictures, videos, started blogging and even shared personal data. Suddenly data consumers became data creators. In fact, a study found that digital information was the most rapidly growing type of unique information produced, with most text-based information “born digital.”
This information explosion gave birth to what is known as “Big Data”.
Again Marketing tactics shifted. A greater emphasis was then placed on inbound marketing and with rich data user interface and user behavior helped in development of better user experiences.
Big data has made it possible to track patterns and trends of human behavior. Data-driven marketing started gathering momentum and a number of companies have emerged that specialize in this technology, such Oracle
In the mean time, new and bolder formats ad formats started coming in. Interactive animated banners, ads with music, banners with lead forms started coming in. Media agencies could easily buy these ad formats on a fixed rate card from bigger websites for marketers. But there was a huge headache on how to reach 1000’s smaller specialized website. E.g a blog on cars can be very good place to advertise for marketers from automobile industry. Another problem was unsold inventory on big websites on its niche pages.
This need gave rise to a need breed of agencies. Ad networks.
Now even the smaller websites could go and list their ad inventory for advertisers. So basically online advertising network or ad network is a company that connects advertisers to websites that want to host advertisements. The key function of an ad network is an aggregation of ad supply from publishers and matching it with advertiser’s demand.
Today the advertising network market is a large with revenues touching $239.87 Billion in 2019. There are more 500+ ad networks currently operating. Obviously, there was a need to bring multiple ad networks together.
An ad exchange is a technology platform that facilitates the buying and selling of media advertising inventory from multiple ad networks. Prices for the inventory are determined through real-time bidding (RTB). The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory.
To bring multiple ad exchanges together we now have DSPs or demand side platform, but let’s discuss that in a later article.
Wow… but Digital Marketers were hungry for more. They needed something special…. Cookie!
An Internet cookie is a small piece of data sent from a website and stored on the user’s computer by the user’s web browser while the user is browsing. Cookies were designed to be a reliable mechanism for websites to remember information (such as items added in the shopping cart in an online store) or to record the user’s browsing activity (including clicking particular buttons, logging in, or recording which pages were visited in the past). They can also be used to remember pieces of information that the user previously entered into form fields, such as names, addresses, passwords, and credit-card numbers. Originally developed in 1994, they steadily became more complex over time.
Cookies can now track user behavior as they go from page to page. Now Cookies intelligently track user behavior across multiple sites so that the information can be used to deliver targeted display ads even though no personal data is collected such as name or address. The outcome is an intelligent tracking that is a more personal, relevant giving a richer online experience for internet users.
Let’s take an example, if you are looking for headphones of brand A, the information is stored in cookie and passed on to these intelligent networks. This information is obviously very important to Brand B who sells a similar headphone. Advertisers can buy this data real time on an ad exchange or a DSP and show you similar or relevant products.
Decentralized Web / Web 3.0
When the first Apple iPhone hit the market in 2007, not everyone was convinced it would supplant the flip-phone. When Google’s Android software system arrived a year later, the Blackberry still seemed to have bright future.But with the iPhone 4 in 2010, featuring a high-resolution display, sleek design and front-facing camera, our collective fate was sealed.
The total number of internet subscriptions has soared to 7.2 billion globally from 1.3 billion in 2010. With so many connections came in 3 most important demands: connectivity, engagement and security.
Today we are in a world where the biggest weapon is Data. If marketers have the data they will find a way to reach the customer at the “right place and right time”.
And the war for data has already begun.