“You may hate gravity, but gravity doesn’t care.”

Clayton Christensen, Harvard Business School professor and author ‘The Innovator’s Dilemma’

While the focus of this book is on digital marketing, which by its very nature tends to gravitate towards the newest trends in technology, it can be extremely helpful to step back and realize that technology and marketing do indeed follow somewhat predictive patterns.

These revolve around how human beings view new ideas, join and build communities, consume information and establish relationships with brands.

The Internet at its core is all about serving up connections across a network. It started on the desktop and has evolved to weave itself into the fabric of our daily lives through social media. Platforms for communicating and connecting started with email and have morphed into Facebook and Twitter.

Yet, for all this new technology it still shares some common characteristics that are quite useful to understand and we can look to the emerging field of Network Theory for answers.

Telephones as a way to understand Network Theory

Let’s start with an invention we all take for granted, the telephone. In 1876, Alexander Graham Bell famously cried out, “Mr. Watson, come here! I want to see you!” and with that phrase the telephone was invented. By 1935 the first telephone call around the world was completed.

But how did the technology get adopted?

In the case of the telephone the old joke often goes, “The hardest sell in the world was the first telephone”.

This joke underscores the huge challenge of early user adoption and presenting the benefits of joining a network.

Social Network Theory and Metcalfe’s Law

The telephone can teach us much about how the online world works today by exploring a field of study called network theory and in particular Metcalfe’s Law. (Metcalfe’s Law is attributed to Robert Metcalfe, a former researcher at the famous Xerox Palo Alto Research Center who co-invented ethernet.)

Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).

A phone network is a perfect example to illustrate Metcalfe’s Law. A single phone really just being an end point in a network called a node. (The name comes from the Latin root of nodus, meaning ‘knot’). Obviously, today there are billions of nodes within global cellular networks.

So by punching in a simple phone number convention, we can use our phone to access the network (which we pay for) and connect to another node anywhere in the world. The value of the network to you as a user rises exponentially over time with the number of phones added to the network.

As you can imagine, in the 1930s the value of the phone network was still relatively small given the anemic number of people with access to a telephone.  But over time as the technology was adopted and the price fell, the value rose to the point that the simple telephone was in every home, business, and on every street corner.

Hint: See the parallel with the web and social media?

This book is meant to be brief. The idea behind publishing updates to the text is to try and steal an idea from the open source software mantra of “release early, release often.”

The online world changes fast.

Which is why a digital format works well. We can observe current best practices and case studies and update sections every few months versus every few years.

The utter lack of textbooks for the beginner in this area speaks to the challenge of educating professionals and university students on a broad level of the basic fundamentals of digital marketing. When possible the student is encouraged to dive deeper into a particular field of study as this book and course is meant as an introduction and not an in-depth analysis. We could easily spend a semester going over just social media platforms and tactics.

The reader will notice quite a bit of history and what I call foundations that I believe are key to understanding digital marketing. A firm grasp of this area let’s the marketer analyze new trends and technology through a different lens. Technology is dependent on time and culture – remember radio was once a magical invention – yet it follows similar patterns for adoption.

I have made a concerted effort to weave a balance of theory and real-world examples. Together, I believe they help reinforce each other. I am deeply humbled and grateful to the digital marketing and design professionals who have generously donated their time for the case studies and career advice sections.

They represent what is great about the web – openness, sharing, giving back and a curiosity to learn.

As we have seen throughout history, the rise of a new medium creates opportunities and challenges.

It’s easy to see why radio was a hit versus static newspapers when you think about the user’s experience with the different mediums. The human experience of storytelling is timeless and the radio programs of the era focused on the same elements told around campfires since the dawn of time – humor, drama, and education. The one advantage of reading a newspaper is the bit of control of what you would like to read. Albeit the content has been curated and edited by others.

With the arrival of television, the storytelling experience improved exponentially and suddenly closely related that of real-life. Nonverbal communication like facial expressions and body language suddenly leaped out of a plywood box into the living room. Following World War II, the country with its new found prosperity and manufacturing capacity eagerly latched on to building and consuming the new technology.

However, there was no way to tell in real-time if a user would remember the message and take action at the time of purchase. This led to the jaded marketing phrase, “spray and pray”.

There had to be a better way. Enter the web.

“Television won’t last because people will soon get tired of staring at a plywood box every night.”
–Darryl Zanuck, movie producer, 20th Century Fox, 1946

Starting in the late 19th century, the idea to transmit and decode moving images was put forth in Europe. This culminated in the first scheduled television service in the US started on July 2, 1928. By 1947, there were 40 million radios and only about 44,000 television sets with the majority being clustered in the New York area due to broadcast networks. By 1951 the infrastructure stretched to the West Coast.

As with all successful technology adoptions, prices to acquire finally dropped to levels middle-class Americans could afford by 1947 with Motorola’s VT-71 priced at $189.95 (accounting for inflation this would be an astounding $1,843 today).

Amazingly only .5% of Americans had a television in 1946 but 55.7% owned one in 1954 and by 1962 ownership rose to 90%. The rise of television is one of the swiftest technology adoption rates in history.

Companies scratched their head about who would pay for all this content and looked to radio and newspaper advertising models where the content was given away for free (shows, news, etc.) and in exchange advertisers paid for spots to plug their products. NBC developed various drama series in the 1950s and sold sponsorship rights for programs like Kraft Television Theater.

Sound and Motion: Television Creates A New Media Experience

Like radio before it, the experience of watching television in the privacy of your own home was nothing short of mesmerizing. Stories that used to exist in only spoken form now had the richness of actors and could be enjoyed on a weekly basis. Americans began relating to others through conversations around their favorite shows. The medium was starting to shape culture and social interactions.

A Dream Medium for Marketers

Marketers began to see television as a massive shift in advertising tactics and one of incredible opportunity. It was a once in a lifetime medium for marketers – much like the web is today. Never before had moving images and voice been so easily combined to promote a product. Have a great laundry detergent? Well, let’s show our product instantly removing stains with a call to action to watch for coupons in this Sunday’s paper. The equation was fairly straight forward for driving sales and growth in consumer products. Company growth was limited in large part by the amount of dollars available to spend on advertising.

The nation was coming out of war, had a population boom, and was ready to purchase consumer goods in quantities and ways the world had never seen. Television networks had an incredible experience to offer and only three networks to access it on. The audience was tightly corralled with few choices for entertainment.

And so the three pillars of traditional media were sealed: print, radio, and television.

Market Domination: Before Microsoft there was RCA

As we saw in the previous section, RCA leveraged end to end control of device and connection in radio. As a new media emerged, the company also performed the incredibly rare feat of dominating another technology platform – television.

The National Broadcasting Company (NBC) was formed by RCA in 1926, funded in large part by its lucrative radio business. Soon after the company added another network and called the two NBC-Red and NBC-blue, respectively. Government regulators became concerned over the company’s increasing control of the airwaves and in 1943 forced the company to sell its Blue network, which eventually became ABC. The big three was thus born: NBC, ABC, and CBS. .

The tyranny of the three in this new field held considerable sway with companies and consumers. Adoption was helped along by visionary executive teams that saw not only the potential of such new technology but were also comfortable with the considerable risks and infrastructure investments needed.

The Tyranny of a Few

With a handful of companies controlling the words we read, the news and music we listened to, and the shows we watched, they wielded unbelievable power not only in product marketing but in society as a whole.

In the 1960 presidential race, candidate John F. Kennedy went head to head with Richard Nixon in the first ever televised debate. The debate was scheduled late in the day and Kennedy took the time to shave and was amicable to having makeup applied. Nixon declined. Once on-air Kennedy looked rested and youthful. Nixon appeared haggard and sweaty. The momentum shifted to Kennedy as his nonverbal communication style and appearance won over voters. He simply came across as more likable through the medium of television. Within a few short years, television was already able to change politics and shape public opinion.

The costs to deliver such messaging with a national reach were far less than door-to-door sales. Companies had to compete through advertising and leveraged all they could through creative work and big media buys. The popular television series Mad Men seeks to show what Madison Avenue was like during this hay day.

The First Fracturing

During the late 1970s, cable television rose to prominence in many American homes with almost 16 million paying for the service by the end of the decade. While there had traditionally been the major broadcast networks of ABC, NBC, and CBS which broadcast their content for free, the cable companies looked to charge customers for access to their packaged content and in addition also relied heavily on advertising.

Following deregulation with the 1984 Cable Act, growth exploded and an endless variety of channels sprouted up. The rise of stations devoted exclusively to news, sports, or music allowed viewers to tune into the content they wanted. While they still had no say over the scheduling, they were one-step closer to picking the subject matter.

The result of all this choice led to a splintering of the television audience. While Americans continued to watch more television, viewers were not as tightly contained as before. Marketers used this to their advantage and were able to more finely target their messaging based on the viewership demographics. In short, they traded broad reach for the ability to segment viewers. For example, those viewers tuning into CNN would likely be college-educated and upper-income and thus potential customers for financial services.

The model of advertising spends associated with sales more or less held true but was starting to ever so slightly wane in its ability to deliver results.

The video below gives a good overview on the invention of the television.