Investments and digital: do they have a joint future? - Студенческий научный форум

XII Международная студенческая научная конференция Студенческий научный форум - 2020

Investments and digital: do they have a joint future?

Чиркова Е.В. 1, Чараева М.В. 1
1Южный федеральный университет
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Introduction

The modern world at this stage of development is subject to rapid changes. Almost every day new trends come to replace the existing ones. One of these trends is the digitalization. All enterprises today pay great attention to their business in the online environment, trying to create such a space for their business where people can make purchases right on their website or in the app effortlessly. Offline sales are gradually fading into the background, giving way to the already established trend of digitalization and transferring sales to online environment. And now the most popular channels of promotion and sales are not traditional, but digital channels, such as social networks, contextual advertising and SEO-optimization.

Every organization that wants to increase its KPI, invests large amounts of money in the field of digital: expands its staff, hires specialists who understand this field, develops and conducts expensive advertising campaigns in the online environment, analyzes and diagnoses its website, social networks, other channels and advertising campaigns and channels of promotion of competitors in order to further improve them.

Due to the increasing popularity of the online environment and digital tools, this direction is also a trend in investment activity. Almost all investors strive to invest their money in the information technologies developing every day. Already in 2019, stock exchange players have stopped investing in technologies such as virtual reality, cryptocurrencies, blockchain and others, increasing their capital now by investing in artificial intelligence, Big Data and other tools related to sales, marketing and financial technologies, as well as in the fields of their application and, in particular, in the online environment. Many projects today are changing the business processes of the old economy with the help of information technologies and thus are entering new markets and levels.

Purpose of research

The world is developing in the direction of digitalization and increasing the transition of our lives in the online environment. Huge sums of money are being invested in this sphere, expecting that such investments will bring good profit. And they bring. Today, the Internet space is the main market for circulation and cash flow. So, the purpose of our research is to identify opportunities for co-existence and development of the digital environment and investments or, in other words, finances. How long will this sector attract the bulk of money worldwide? And how soon will its popularity decline? And will this happen at all?

Material and methods of research

To achieve our purpose, we used various materials of Internet resources, including scientific publications, news articles and researches by other authors. The results of a Direct Marketing Association together with Demand Metric’s research in 2016 was formed the basis of our research.

The methodological basis of the research is the works of Acito Dominic, Istomina Maria, Herhold Kristen, Romanova Svetlana and Nosyrev Ilya, who also studied the problem of investment in the digital environment and presented us the results of their researches.

The results of research

"In my opinion, the hottest industries for innovation are retail and related logistics. But the hype in financial technologies has begun to decline. Also, thanks to more accurate targeting and using of Big Data, marketing and advertising will be developing. Our Foundation also looks at these industries."- Alexander Chachava has told to RBC, managing partner of Leta Capital Foundation. [1]

A prerequisite for investment in the modern world is the orientation of the project to the international market. And Russian startups should not consider the home market for their future activities, as large international investors are not so loyal to Russian entrepreneurs.

But, despite such a high popularity of this direction among large investors, no company can compete with others in the market today without a good digital strategy, otherwise they will be forced out of it. Good marketing strategies in the online sphere ensure that all the traffic that the site receives is not just a figure of attendance, but will turn into a figure showing the current clientele of the company. Digital marketing helps organizations expand their reach, ensuring new customers are attracted anywhere and anytime.

According to experts, by 2020, spending on digital marketing strategies will exceed $ 2 trillion worldwide. And there are the following reasons for this:

1. Easy access. People all over the world spend from 5 to 9 hours per day on the Internet and social networks, which is an integral part of our lives today. We live in the world of technology and now it is the best way to reach your potential customers. The world has become a global village where, with a single click, you can connect with a person at the other end of it. Thus, it is much easier for businesses to reach their target consumers. [2]

2. Communication with customers 24/7. The digital allows companies to stay in touch with potential consumers through e-mail, social networks and messengers. This ensures the business will always have customers, because in this way sales managers can increase their loyalty to the company, through constant interaction, assistance and support, as well as unique offers for a particular consumer. [3]

3. Transparency and increased ROI. Digital marketing tools allow to track all the necessary indicators of the advertising campaign, so that, in turn, marketers can see the advertising brings any income and leads or not. Using of digital marketing tools allows organizations to attractive a lot of leads. And make immediate adjustments and correct the situation in case of incorrect settings of the advertising campaign.

4. Cheap and environmentally friendly. Traditional formats are gradually fading into the background because of their quite expensive implementation and harm to the environment, which is the most popular today and unchangeable trend for several years. As for the first thesis, printing several thousand leaflets for distribution, which will immediately go to the trash can, is expensive and inefficient. Advertising on television is one of the most expensive ways to promote. What about newspapers? Almost no one reads them anymore, everyone has gone to the Internet. In addition, the digital form of marketing is more environmentally friendly, as it does not leave companies with tons of unusable printed material.

5. Internet users = customers. Being in the Internet space and social networks, people may not be aware of their needs sitting deep inside, but as soon as they see an advertisement, for example, in Instagram, there is a click in their brains and their opinion sharply changes about it. Now they want to buy this product. Thus, with the help of digital marketing tools, companies can manage the needs and desires of consumers, as well as the demand for their goods and services.

Talking about investments, you should always also mention the risks and financial consequences of such decisions.

In this case, when a company invests in its promotion with the help of digital marketing tools, we can only say about the risks associated with an improperly developed marketing strategy or its incorrect implementation, setting up targeted advertising and other tools, and, accordingly, inefficient spending of financial resources.

In conclusion, it should be noted that in 2018, the volume of advertising in the digital overtook television advertising for the first time and advertising on the Internet took the largest share in the media segment, pushing TV to second place. In addition, compared to 2017, advertising revenues from digital advertising increased by 22 % in 2018 and amounted to 203 billion rubles. For example, the largest players in the segment of Internet advertising "Yandex" and "Mail.Ru Group", the results of which can be compared with the average market indicators. So, in 2018, the revenues of the largest Internet company "Yandex" had been growing with the market indicators and increased by 22 %, amounted to 101.1 billion rubles. As for "Mail.Ru Group", they overtook the market indicators and advertising revenue increased by 38.6 %, amounted to 31.9 billion rubles. [4]

At the same time, further growth of the volume of Internet advertising and its share in the total media segment is predicted, which can be represented in the form of a chart (figure 1).

Fig. 1. Share of digital advertising costs in total advertising investments for the period 2017-2021. [5]

While, investments in digital have good profitability indicators. So, in 2016, Direct Marketing Association together with Demand Metric conducted a study to identify the most profitable Internet marketing channels. The results of this research showed at that time the greatest profitability gives email marketing - 122 %, which is almost four times more than other digital channels such as social networks, search engine optimization and others (figure 2).

Fig. 2. Average return on investment for marketing channel selection. [6]

Today, the digital environment is not just a trend, but a necessity for every company if it wants to stay in the market in the long term. Without a qualitatively developed, effectively and correctly implemented digital strategy and, in particular, without investing in this field, organizations unable to exist in modern realities. The digital is expanding and every year covers an increasing share of the total media segment. The successful and rapid development of this direction is facilitated by its easy accessibility, environmental friendliness, constant contact with customers, transparency, relatively low cost and the growth of the number of users compared to other channels. Moreover, not only companies are ready and striving to invest in digital in order to promote themselves, but also large investors of international stock exchanges in order to develop this field and develop new channels and tools. Already in 2021, according to the forecast of the advertising Agency Zenith, the share of advertising costs on the Internet will exceed 50 % of the total advertising investments, indicating the rapid growth and the need to invest in the digital of each company. Correctly made investments in a fairly new direction quickly pay off and have high profitability, which is undoubtedly a great advantage of it.

Conclusion

The research showed that the amount of money in the field of digital will only increase every year. Other researchers, marketing agencies, financiers also come to this.

We can't imagine our lives without phones and the Internet. The most popular Internet portals with the greatest coverage are social networks, namely Facebook and Instagram; in Russia, the social network VKontakte is also among the leaders. Today, these three Internet giants are the main market for goods and services in the world. Every day, going to these social networks, we view at least 10 advertisements trying to sell us all kinds of goods and services and lure to the pages of their online stores. In most cases, they succeed, which indicates the effectiveness of this channel and investment in it.

Thus, it can be concluded the Internet is the most profitable and cost-effective platform for business, as when using it there are no high costs, and it brings traffic 20-30 times more than traditional offline platforms.

As a result, it can be assumed that large investors in international markets will continue to invest their finances in the digital environment, increasing the volume of investments every year. The overall investment and digital market are already growing at a tremendous rate, leaving far behind its competitors.

References

RomanovaS., NosyrevI. What technologies to invest in 2019.URL: https://www.rbc.ru/own_business/08/01/2019/5c2485929a794773e5900fe0. (circulation date:10.11.2019).

Acito D. 7 Good Reasons To Invest In Digital Marketing. URL: https://marketing.toolbox.com/blogs/dominicacito/7-good-reasons-to-invest-in-digital-marketing-100117. (circulation date: 15.11.2019).

Herhold K. Why Digital Marketing Is an Essential Investment. URL: https://www.business2community.com/digital-marketing/why-digital-marketing-is-an-essential-investment-02129487. (circulation date: 15.11.2019).

IstominaM. Internet Advertising Overtook Advertising on The TV for The Fist Time. URL: https://www.rbc.ru/technology_and_media/11/03/2019/5c8619ce9a79473741c1055f. (circulation date: 03.12.2019).

Internet advertising will exceed half of global adspend in 2021. URL: https://www.zenithmedia.com/internet-advertising-will-exceed-half-of-global-adspend-in-2021/. (circulation date: 07.12.2019).

Email Continues to Deliver Strong ROI and Value for Marketers. URL: https://www.emarketer.com/Article/Email-Continues-Deliver-Strong-ROI-Value-Marketers/1014461. (circulation date: 07.12.2019).

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