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Week 8 · Ofir Richman

Lecture 8 — Market Shifts, Engagement & Relationship Marketing

Lecture 8 — Market Shifts, Engagement & Relationship Marketing

Part of: Digital Marketing Topic 8 — Key Shifts, Challenges & Engagement-Led Marketing · In-class slide deck (Ofir Richman, 2026B) Key concepts: Traditional Advertising, Digital Clutter, Third-Party Cookies, CLV, loyalty as a platform, contextual marketing (3Cs), native advertising, STEPPS, UGC, Word of Mouth

About this note

This is a reconstruction of the in-class deck, which is slide-heavy: many slides are a title plus a logo, chart or video link, so the meaning comes from Ofir's narration in the room. Where a slide already carried bullet text (the Engagement-led Marketing, Native Advertising and STEPPS slides especially), it is reproduced faithfully. Where a slide was only an image or a case-study logo, the surrounding explanation is reconstructed from standard marketing theory and flagged as reconstructed. Use it as a study scaffold, not a verbatim transcript.

Scope / dedup: the deck opens with the content-marketing frameworks — the Content Strategy Matrix, Google 3H (Hero-Hub-Help), Content Properties, the Periodic Table of Content Marketing, the AI-limitations critique and the content-along-the-customer-journey model. Those are owned and fully explained in Digital Marketing Lecture 7 — this note does not re-explain them. From the "Key shifts" section onward is what this note owns.

TL;DR

After recapping the content-marketing frameworks, the deck pivots to how the market itself is shifting and what marketers should do about it. Four movements: (1) Key shifts — the rise of Consumer 2.0 and the collapse of traditional-vs-digital media time and ad spend. (2) Platform challenges — Banner Blindness, ad blockers, the Cookie-pocalypse (1st- vs 3rd-party data) and GenAI fatigue. (3) A redefinition of competition — by customer need, not product segment (Netflix vs sleep / Fortnite), plus engagement-led vs traditional marketing, relationship marketing & CLV, loyalty as a platform, and contextual marketing (the 3Cs). (4) Advertising responses — native advertising, the "human premium" against AI fatigue, and UGC + the STEPPS framework for engineering word of mouth.

Exam-critical

This lecture is a dense source of direct MCQs on the 2024 papers: STEPPS, native advertising ("which is NOT native"), the resurgence of traditional advertising, WOM, third-party cookies and digital clutter. The specific question themes are called out at the end and cross-linked to 2024 Exam B1.

Part 1 — Key shifts

The rise of "Consumer 2.0"

The main consumer trend is the Consumer 2.0 — mnemonic P.I.M.S.:

Consumer 2.0 is P.I.M.S.
  • Personalized — expects content and offers tailored to them.
  • Interactive — talks back; a participant, not an audience.
  • Multi-screen — moves fluidly across phone, laptop, TV.
  • Social — publishes and shares their own content.

The slide's takeaway (reproduced): technology is levelling the playing field and publishing personal content is blooming. As a result Consumer 2.0 is more in control, more vocal, less loyal, and appreciates transparency — "it's all about ENGAGEMENT." That last word is the thesis of the whole lecture: attention is now earned through engagement, not bought through broadcast.

The media-mix shift: digital overtakes traditional

Two curves crossing (Statista / eMarketer, on the slides)
  • Time spent per day, US (2011→2023): digital rose from 214 → 500 min; traditional fell from 453 → 285 min. They cross around 2017 — after that, people spend more of their day in digital media than in TV/radio/print.
  • Ad spend by media share: online went from 40% (2017) → 71% (2025); TV fell 26% → 13%, print 10% → 3%. Total ad spend grows toward ~$1.4T by 2029.
  • Within digital, spend keeps climbing (search + video + banner); social-media ad spend alone climbs from ~$51B (2017) toward ~$406B (2029).
  • Mobile vs desktop: mobile's share of ad spend rises from 46% (2017) → 70% (2029) — desktop is now the minority screen.

Figures are the ones printed on the deck's Statista charts. The lesson: the money has followed the attention onto digital, social and mobile — but (as Part 2 shows) that crowded digital space brings its own problems, which is precisely why traditional advertising is staging a comeback (see reading notes and the term below).

Part 2 — Digital platform challenges

The deck lists four reasons the shift to digital is not a free lunch. All four ultimately push marketers back toward engagement (and, for some, back toward traditional media).

Jakob Nielsen (Nielsen Norman Group), eye-tracking studies

Summary on the slide: "Users rarely look at display advertisements on websites. Of the 4 design elements that do attract a few ad fixations, one is unethical and reduces the value of advertising networks."

Banner Blindness is the well-documented tendency of users to ignore banner-style ads — the eye-tracking heatmaps show attention (red/yellow) clustering on editorial content and skipping the ad slots. Reconstructed context: the deck notes "mobile isn't that simple either" — mobile-game ad formats (playable, rewarded, native, banner, video, interstitial) each fight blindness differently, but the underlying problem is the same: people have learned to tune ads out.

Ad Blockers

A quarter or more of internet users now run ad blockers: the slide (Statista Global Consumer Survey, 2021) shows US 28%, Germany 27%, UK 27%, France 26%, Spain 25%, Italy 20%. A meaningful slice of your paid-display audience simply never sees the ad.

1st-party vs 3rd-party data (from the diagram)
  • 1st-party cookie: site A plants its own cookie to recognise you when you return to site A. You have a direct relationship; this data survives.
  • 3rd-party cookie: an ad network plants a cookie that follows you across sites — visit site B for the first time and the network already has your profile (which sites/pages you visited) and serves targeted ads. This is what powers cross-site retargeting.

The "Cookie-pocalypse" is the phase-out of third-party cookies by browsers (Safari, Firefox, and Chrome's on-off plans). The strategic consequence, which ties the whole lecture together: if you can't rent 3rd-party tracking, you must own the relationship — i.e. build 1st-party data through genuine engagement, loyalty and CLV. This is also flagged in the reading notes; see the Third-Party Cookies term.

GenAI fatigue

The "GenAI" challenge slide (a half-peeled banana on a circuit board — a nod to the "Nano Banana" image models) previews the theme picked up in Part 4: the flood of generative content is itself becoming a problem, provoking AI fatigue and a countervailing "human premium."

Part 3 — Trends in advertisement (2026)

Competition redefined — by NEED, not product segment

The core reframe

Competition is by customer NEED, not by product segment. Your rival isn't only the firm making a similar product — it's anything competing for the same need, customer, time or resource.

The deck builds this with a "Competition?" montage — iPhones, the whole evolution of mobile phones, then status-quo alternatives (a door, a Post-it, a landline, a payphone, a paper diary). The punchline is Reed Hastings' line for Netflix:

Netflix CEO Reed Hastings (Fast Company, 2017)

"Sleep is our competition." Netflix competes not with other streamers but with anything consuming the viewer's evening — including Fortnite (a 2018 investor letter named Fortnite a bigger threat than HBO), and even sleep itself.

Direct vs Indirect competition (from the slide)
  • Direct competition — rivals within the same / similar industry or product category (Netflix vs Disney+).
  • Indirect competition — anyone fighting over the same NEED or CUSTOMER (Netflix vs Fortnite vs sleep).

Defining your market by the need (relaxation, a full evening of attention) reveals a far wider — and more honest — competitive set than defining it by product.

Engagement-led marketing vs "traditional" marketing

The pivot from Part 1's Consumer 2.0 is made explicit with two framing quotes and a comparison table (Thunderhead, 2019).

From the slides

Carl Freemont: "Consumer's attention given to brands is not grabbed by shouting at someone, but earned by engaging consumers in a brand's essence."

Damian Ryan: "Marketing is evolving rapidly to become more of a conversation than a lecture… marketers need to participate in that conversation… and to spend part of their time listening."

"Traditional" marketing → Engagement-led marketing (Thunderhead)
"Traditional" marketing Engagement-led marketing
Product-centric Customer-centric
Marketing to Marketing with
Targeting Engaging
Transactions Relationships (and lifetime value)
Schedules Moments
Inbound / outbound Interactive
Periodic Continuous, real-time
Based on generalizations Based on specific matched needs
Customer segments Customer recognition (individuals)
Limited context Rich, actual context
Marketer determines value Customer determines value
Product thinking Service thinking

The through-line: engagement-led marketing treats the customer as a known individual in a real-time conversation, not a segment on a schedule. Customer Engagement and Personalization are its operating tools.

Relationship marketing & Customer Lifetime Value

From the slide

Relationship marketing = the connection between the brand and the consumer. For marketers to enjoy real Customer Lifetime Value (CLV), they must first establish a true relationship with customers.

Relationship building means: foster a continuous value exchange, engage in real time, and know all that is knowable about the customer. The deck maps this to a relationship funnel (Cheetah Digital, 2022) — the customer moves through four stages, each with its own job:

The relationship funnel
Stage What you do
Unknown consumer Grow your database; build consumer profiles
Known customer Unify datasets; segment & analyse
Retained customer Cross-channel engagement; personalization at scale
Loyalty member Reward loyalty; foster advocacy

The pay-off is at the bottom: turning a stranger into an advocate is what unlocks CLV — and, crucially, generates the 1st-party data that survives the cookie-pocalypse.

Loyalty & "loyalty as a platform"

The new era of loyalty (Prophet)

The most effective programs no longer act like isolated "earn-and-burn" schemes. They operate as integrated platforms and connected ecosystems that deepen emotional loyalty, unlock richer data, and open new revenue streams.

Loyalty as a platform is built on four quadrants: Engagement (many ways to interact), Recognition (the program knows and shows me), Reward (benefits match my preferences), Community (I feel I'm taking part). Data is captured and leveraged throughout.

Treating loyalty as a platform lets a company own the customer relationship and data, drive consistent engagement across channels, experiment with monetization/personalization, and build long-term differentiation, not just short-term reward loops. Emotional loyalty — built through connection, community and relevance — is more powerful and sustainable than purely transactional rewards. This is Brand Loyalty recast as an always-on engagement engine.

Loyalty cases from the deck
  • PlayStation Stars (Sony, 2022) — points redeemable for PSN wallet funds; gamifies the platform.
  • Clover Health LiveHealthy — reward dollars on a Visa card for completing health activities (up to $150 to visit a doctor, etc.) — loyalty driving behaviour, not just spend.
  • KFC app case study.
  • Apple Fitness+ (2025) — a subscription ecosystem (new programs, Strava collaboration) that deepens the Apple relationship across Watch/iPhone/iPad.
  • Loyalty isn't always monetary: Spotify Wrapped and YouTube Recap (2025) — personalised year-in-review recaps that reward users with identity and shareability, not cash. Free WOM fuel.

Contextual marketing — the 3Cs

Contextual marketing essentials (3Cs)
  • Content — the message itself.
  • Context — the situation/moment it lands in.
  • Channel — where it's delivered.

The right content in the right context on the right channel. Getting all three aligned is what makes a message feel relevant rather than intrusive.

3C cases from the deck
  • Tinder + Domino's — a Valentine's tie-up: pizza offered inside the dating app, at the exact moment ("looking for a date?") — content, context and channel all aligned.
  • WSJ + Netflix "Cocainenomics" — a Wall Street Journal interactive feature promoting Narcos; explored again as native advertising below.
  • Football DNA / MyHeritage DNA (via Taboola) — sponsored content matching the sports-editorial context, distributed on content-recommendation networks.

Part 4 — Native advertising, the human premium & UGC

Native advertising

Definition (from the slide)

Native advertising = a type of advertising, mostly online, that matches the form and function of the platform upon which it appears. It often manifests as an article or video, produced by an advertiser with the specific intent to promote a product, while matching the form and style that would otherwise be seen in the platform's editorial staff. The word "native" refers to this coherence of the content with the other media on the platform.

Three main types of native advertising
  1. In-feed ads — integrated into content pieces and social feeds; blend in to create a non-disruptive experience (e.g. a "promoted" post in an Instagram/Pinterest feed).
  2. Content recommendations — displayed alongside editorial content and similar in format (e.g. Taboola and Outbrain "content you may like" widgets).
  3. Branded / native content — functions as a unique piece of content on the publisher's platform (TV, website, venue, social profile). Example: the Ellen Oscars selfie (Samsung); WSJ's "Cocainenomics" for Netflix; Football DNA for MyHeritage.
Exam — "which is NOT native advertising"

A recurring MCQ asks which method is NOT native. The trap: all the specific options (content recommendations, branded/advertiser-initiated content, in-feed ads) are native — so the correct answer is "all of them are native." See Q15 in 2024 Exam B1. Because native is not in the glossary yet, it is written bold in this note; treat the definition above as canonical.

AI fatigue & the "human premium"

The GenAI challenge from Part 2 resurfaces as a trend:

Gartner (Hype Cycle) — on the slide

AI fatigue = "the inevitable decline in enthusiasm that follows inflated expectations… By 2029, consumer resistance to AI in customer service could lead to a refusal to engage with bots."

VML — "The human premium" (Mao, 2026)

"Audiences are pushing back when brands lean too heavily on AI… Valentino faced backlash for AI-generated handbag ads, with fans calling the visuals 'lazy' and 'cheap', while Gucci drew similar criticism after posting AI-generated images ahead of Milan Fashion Week… the issue is not the technology itself, but what it symbolizes: a shortcut, a cost-cutting measure, disregard for human craft."

47% globally believe humans have the advantage in creativity, vs 30% who say AI does (VML).

Reconstructed link: the deck pairs this with a behind-the-scenes ad shoot (a person in a bear suit) — the point being that visible human craft is itself becoming a selling point. The "human premium" is the reconstructed answer to AI fatigue: lean into authenticity where rivals lean into automation.

UGC as strategy

From the slide

User-Generated Content is considered by most clients to be reliable, trustworthy, and perceived as less commercialized. It spans education, news sites, photo sharing, social networks, online games and location sharing.

Why & how UGC (from the deck)

Why: (1) trust in official marketing runs thin; (2) UGC is perceived as authentic; (3) it supports brand loyalty. How: (1) define the incentive; (2) keep authenticity; (3) listen, analyze, react — optionally use influencers and boost the best posts.

The strategic idea: instead of the brand making the ad, the audience makes it — which is more credible and effectively free reach.

STEPPS — engineering word of mouth

The deck returns to WOM via Jonah Berger's Contagious: Why Things Catch On.

Berger (Harvard neuro study)

"Sharing is rewarding in the same way as food and other high-pleasure reward." People are wired to share — the job of marketing is to give them something worth sharing.

STEPPS — six drivers of contagious content (Jonah Berger)
Element What it means
S — Social Currency People share what makes them look smart, cool, in-the-know (insiders).
T — Triggers Top-of-mind = tip-of-tongue: cues in the environment that prompt people to think of your product.
E — Emotion "When we care, we share." High-arousal emotion (awe, anger, excitement) drives sharing.
P — Public "Built to show, built to grow": the more visible the behaviour, the more it's imitated (visible behavioural residue).
P — Practical Value "News you can use": genuinely useful info gets passed on.
S — Stories Information travels inside narratives — a story is a Trojan horse that carries your idea along for the ride.
Exam — STEPPS is a direct MCQ

The papers test individual STEPPS elements — e.g. Q11 in 2024 Exam B1 asks which element makes the sharer look like a maven/expert → Social Currency. Learn each of the six and its one-line distinction. Do not confuse Triggers (top-of-mind cues) with Social Currency (looking smart) or Practical Value (useful info).

WOM / UGC cases from the deck
  • Chipotle #ChipotleLidFlip — a TikTok challenge (with David Dobrik) generated 111,000 videos in 6 days and 250M+ views, driving a record digital-sales day among Gen Z. UGC + Social Currency + Public in action.
  • "Don't make ads, make TikToks" (TikTok for Business) — the most successful TikTok "ads" don't look like ads; think like a creator, use native sounds, get the message out in the first 3 seconds. Ads on TikTok work by blending into UGC (Celine Dion trend, Shein hauls).
  • Duolingo — brand account that behaves like a creator, riding trends to earn organic WOM rather than buying reach.

Exam takeaways

What this lecture sets up for the past papers — high yield
  • STEPPS — memorise all six (Social Currency / Triggers / Emotion / Public / Practical Value / Stories). Direct MCQ: Q11 in 2024 Exam B1 (Social Currency = looking like an expert).
  • Native advertising — definition + three types (in-feed, content recommendations, branded content). Direct MCQ: Q15 "which is NOT native" → answer is "all of them are native."
  • Traditional-advertising resurgence — driven by declining digital effectiveness / digital clutter (Moorman, Ryan & Tavassoli 2022). Direct MCQ: Q2 in 2024 Exam B1.
  • WOM — sharing is intrinsically rewarding (Berger); engineer it with STEPPS + UGC.
  • Third-party cookies / Cookie-pocalypse — 1st-party (own site) vs 3rd-party (cross-site ad network); the phase-out pushes brands toward owned relationships & 1st-party data.
  • Digital Clutter — the ad-fatigue/blindness that erodes digital effectiveness (links to Banner Blindness + ad blockers).
  • Competition by NEED — direct (same industry) vs indirect (same need/customer): Netflix vs Fortnite vs sleep.
  • Engagement-led vs traditional marketing — customer-centric, with not to, relationships over transactions, CLV.
  • Loyalty as a platform — emotional > transactional; Spotify Wrapped / YouTube Recap show loyalty needn't be monetary.