online marketing 032

Journal of Marketing ManagementVol. 26, Nos. 3-4, March 2010, 361-376

Practitioner prognosticatiorof online marketing

I Taylor & FrancisTaylor & Francis Croup

S on the future

Michael J. Valos, Deakin University, Burwood, Australia

MJchael T. Ewing, Monash University] Caulfield East, Australia

Irene H. Powell, Monash University, Caulfield East, Australia

Abstract In arguably the most dynamic period in the history of marketing, and inparticular the management of marketing communication, the challenges andopportunities presented by online marketing are both imnnense andunprecedented. In an effort to understand how these challenges are perceived atthe 'coal face', this paper solicits and longitudinally compares senior marketingpractitioners' perceptions and perspectives, both recently (late 2008) and five yearsprior (20031. Due to the rapid evolution of online marketing and its impact on bothconsunner behaviour and marketing strategy, a longitudinal qualitative researchdesign was employed to track changes in senior marketers' perceptions. Findingsare presented and discussed within the context of six recurring themes: interactivity,personalisation, integration, evaluation, agency structures, and capabilities. Thepaper concludes by examining the utility of integrated marketing communicationas a marketing management framework for online marketing strategy.

Keywords online marketing; practitionerdigital media trends

s perspectives; qualitative research;

Introduction

Online marketing has been projected to have a major impact on marketingmanagement (Ewing, 2009; Hamill ÔC Gregory, 1997; Rust ôc Oliver, 1994; ShethÔC Sisodia, 1999). Nearly two decades ago, Blattberg and Deighton (1991) recognisedthe potential of increasingly sophisticated customer databases and their potential usein interactive marketing exchanges. However, even five years ago, the impact of Web2.0, blogs, podcasts, wikis, search-engine marketing, consumer-generated content,and mobile marketing was significantly underestimated. As varied forms of onlinemarketing are increasingly being used by organisations (with varying degrees ofsuccess), the ability to choose the most effective mix of online and offline marketingchannels has become a critical issue for marketers. Moreover, the integration of onlinemarketing within overall marketing strategy is complicated by diversity in current andemerging online applications (e.g. wikis, twitters, hand-held devices, 3G, socialmedia), measurement issues, and skills shortages.

ISSN 0267-257X print/ISSN U72-1376 online© 2010 V\/estbum Publishers Ltd.DOI: 10.1080/02672571003594762http://www.informaworld.com

362 Journal of Marketing Management, Volume 26

This study traces the evolutionary, revolutionary, and dynamic nature of onlinemarketing by employing a longitudinal qualitative methodology to capture thechanging perspectives of senior marketers from prestigious 'blue-cbip' Australianand multinational organisations in 2003 and 2008. Tbe paper presents a tbree-stageresearch design to solicit perspectives on the online marketing challenges facingmarketing executives. Tbe findings (from botb 2003 and 2008) are discussed witbina framework originally derived from tbe literature (in 2003) and tben updated toreflect 2008 findings. In interpreting tbe findings, particular emphasis is placed oncomparing and contrasting tbe two time periods to understand bow the key issues haveevolved over the five-year interval. Tbe paper then considers the impact of the findingson the utility of current communication models for online marketing and bow tbesemodels may need to be modified. Accordingly, the paper is set out as follows: tberesearcb approach is described, findings are reported and discussed, future researcbdirections outlined, managerial implications considered, limitations noted, andconclusions drawn.

Research design

A comprehensive literature review was undertaken in 2002 to identify tbe key factorsinfluencing tbe growtb of online marketing. Six tbemes emerged - which are describedbelow. However, in the interests of botb recency and relevance, more contemporary(post 2002) literature is also taken into account in reflecting on tbe tbemes. Tbe tbemespertain to interactivity, personalisation, integration, knowledge management, campaignevaluation, and agencies themselves.

Grovifth in interactivity

Interactive communications essentially involves A communicating to B, B respondingto A's communication, and A reacting to B's response. While tbere is still no universallyaccepted definition of interactive marketing, it broadly entails barnessing tecbnologyto create a competitive, customer-centred marketing organisation (Holder &C Fairlie,1999; Kitchen & Schultz, 2009; Rust & Varki, 1996). Blattberg and Deighton's(1991) prescient work on interactive marketing explicates tbe role of transactionaldatabases in facilitating interactive relationships witb individual customers. Indeed, intbe early 1990s, Rust and Oliver (1994) foresaw tbe 'information superbigbway'signalling tbe 'death knell' of traditional advertising, as it directly, instantly, andinteractively began to unite producers and consumers - transforming advertisingfrom being involuntary and obtrusive to being voluntary and sougbt out. Rust andVarki (1996) tben provided a more tecbnical explanation of bow mass media will befunctionally displaced by interactive media. Specifically, tbey posited tbat advertisingwill ultimately be 'by invitation only'. Rancbbod (1998) reiterated the view that 'in tbefuture', effective advertising will take place in computer-media environments. Tbisview still bolds today. Customers have taken a far more active role in acquiringinformation and interacting online (Edelman, 2007).

From mass mari<eting to personalisation

Readily available information tecbnology and flexible work processes permit firms tocustomise goods and services for individual customers in bigb volumes and at arelatively low cost (Gilmore ôc Pine, 1997). It bas been suggested firms practice one-

Valos et al. Practitioner prognostications on the future of online marketing

to-one marketing through mass customisation (Peppers, Rogers, & Dorf, 1999), but asSheth and Sisodia (1999) point out, one-to-one marketing is product-centric becausethe product is the starting point of the planning process. In contrast, customer-centricmarketing focuses on the needs, wants, and resources of customers as the starting pointof the planning process. Personalisation involves a higher level of customer franchiseand involvement than mere customisation. Customers have to interact with suppliersby completing and updating their personal profiles. Personalisation should effectivelysignal the demise of unsolicited and irrelevant marketing communication, as Internettechnologies enable companies to personalise interactions with their customers(Ghosh, 1998). However, Edelman (2007) contends that although the data are thereto do this, generally the process is still not well executed by marketers.

Integrating online marketing into the communication mix

Despite its 'renaissance' in the early 1990s, the notion of integration is hardly new (see,for example, Chandor, 1950). Marketers have long recognised that marketing tools aremost potent when used in conjunction with one another (Blattberg & Deighton, 1991).

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In fact, the term 'integrated marketingan oxymoron. since there is no sensibleHowever, barriers to IMC implementationBulmer, 2007). Conflicts of interest exist

¡communication' (IMC) is in a senseargument against it (Hutton, 1996).

remain of concern (Eagle, Kitchen, &between service providers, particularly

advertising and public-relations agencies (Ewing, de Bussy, & Caruana, 2000). Onlinecommunication adds another element to be incorporated into the integrated mix. Lace(2004) concludes that it is a matter of concern that only half of the companies in his UKstudy believe they integrate digital media successfully. Kliatchko (2007), through hisrevised definition of IMC, attempts to provide guidance for managers for integratingmedia.

Online marketing-knowledge management

Tomorrow's marketing executives will have to process information quicker and morethoroughly than ever before. Marketing communication will become like'engineering' in that it will be database-driven (Blattberg & Deighton, 1991; Peltier,Schibrowsky, Schultz, & Zahay, 2006). Decision support systems and simulationmodels will be used to develop and evaluate marketing communication campaignsprior to real-world introduction. It is likely tbat new systems will be developed to assistin developing the entire marketing campaign (Clancy, 1990), and that the concept ofknowledge management will be employed in the marketing communication planningand evaluation process (Ewing & West, 2000). Consumers will be active participantsin the process of product co-creation via online interaction (Rowley, 2008). In sum,there will be more facts and less conjecture (Day & Montgomery, 1999). Moredecisions will be based on data-driven extrapolations and statistical heuristics thanon conjecture, opinion, and 'gut-feel'.

Evaluation

An assumption underlying most historical studies of advertising's effectiveness is thatadvertising is effective but that more sophisticated measurement tools are needed toquantify the pay off (Jones, 1992, 1998). However, marketing (and especiallyadvertising) will be held increasingly more accountable in the future (Ambler, 2000;Low & Mohr, 2001; Zinkhan &C Verbrugge', 2000). In this regard, evaluation might


focus less on so-called 'soft' measures, such as attitude, awareness, and intention-to-buy,and more on 'hard' measures such as sales, profitability, yield, and actual behaviour(Clancy, 1990). Not surprisingly, research priorities around the world have focused onthe development of metrics that will better judge the performance of marketing activitiesagainst absolute and relative standards (Day & Montgomery, 1999; James, 2008). BothLehmann (1999) and Jones (2000) agree that results should be linked not to awarenessor attitude but to measures that are relevant to the chief financial officer. The only realprogress advertising has made in this regard has been the advent of single-source data,but its application has been erratic and its interpretation inconsistent.

Advertising-agency capabilities

As Jones (2000) laments, 'ad agencies have lost their cachet'. They are no longer seenas genuine business partners with their clients, and, as a result, advertising has in manyinstances 'fallen off top managements' plate'. The agency of tomorrow will almostcertainly be leaner (Rust & Oliver, 1994) and have to work harder for revenues linkedto brand performance (Rust & Varki, 1996). Those agencies that are able to adapt tothe new media environment, incorporate online seamlessly into the brand strategy, andinternalise their role as integrated marketing communication specialists will be theones to survive and perhaps even prosper (Edelman, 2007; Lace 2004).

Method

A longitudinal, qualitative methodology was chosen in order to identify changes inmarketing executives' perspectives of online marketing between 2003 and 2008. Themethodology employed a variant of 'progressive contextualisation' developed by Vayda(1983). This enabled a marketing-practitioner perspective of online marketing to beconstructed in three steps. Eurther, the methodology allowed longitudinal evaluation ofhow the six literature-derived themes evolved from 2003 to 2008.

Step 1: Data collection 2003

A purposive (non-random) sample of 40 marketing practitioners and advertising-agency executives were asked what changes they anticipated in the advertising/marketing communications industry over the next 10 years. There were given sixbroad, semi-structured topics derived from the literature - and briefly discussed earlierin this paper. Many respondents offered more than one response, but, followingRamaseshan & Pitt (1990), they were not asked to rank their responses.

Step 2: Data collection 2008 [A]

Following Gilly and Wolfinbarger (1998), qualitative responses were collectedindividually from marketing practitioners through open-ended questions. As in the2003 study, a small numher of respondents offered more than one response, butrespondents were not asked to rank their responses. Frequencies are therefore notreported. A (second) sample of 40 senior marketing practitioners was asked to indicatethe 'single key challenge' they faced in the area of online marketing. The responseswere grouped according to similarity and the following five challenges emerged fromthe data:


1. Matching online marketing media to market segments;

2. Measuring the value of digital interactions;

3. Linking search behaviour to sales;

4. Getting accurate ROI projections;

5. Co-creating brand personality and brand attributes.

Step 3: Data collection 2008 [B]

The five challenges from step 2 (2008 A) were provided to two focus groups of eightand nine senior marketers respectively (2008 B) who were asked to confirm if thesefive topics covered the key online marketing challenges they face. They identified thefollowing additional points:

1. Obtaining digital services from 'niche digital' or 'full service' advertisingagencies.

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[Tbis became the sixth challenge wben combined with point three below.l

2. Evaluating quality of digital agencies and tbeir services.[This was combined with the existing challenge on the measurement of onlinemarketing.)

3. Working with internal IT staff and internal IT or operational departments.

The following analytical framework emerged through reconciling and indeedintegrating the 2003 (literature-deduced) and 2008 (data-induced) themes, to arriveat six contemporary themes:

1. Matching online media to market segments and personalisation;

2. Measuring the value of online interactivity;

3. Linking search behaviour to sales through integration;

4. Developing nnore accurate ROI projections;

5. Co-creating brand nneaning;

6. Working with agency capabilities.

These themes provide tbe framework for (the presentation and discussion of thefindings. The somewhat non-linear approach is analogous to peeling an onion, andis broadly consistent with the interpretive tradition of tacking back and forth betweendata and literature (Spiggle, 1994).

Results

1. Matching online media to market segments through increased personalisation

2003 practitioner perspectives

The 'increasing fragmentation of media' anc how this might lead to 'less of a mass-media approach' to advertising drew many responses. Respondents offered commentson the options created up by an ever-expanding array of media. One respondent(creative, 7-10 years' experience) noted tbat, 'As media splinters into new areas so


will advertising. The traditional mix of TV, print, and radio will be overhauled toinclude areas and media not even yet imagined'. Many respondents appeared moreconcerned with the problems increased media choices would bring. For example, acreative with more than 10 years' experience, said that, 'media fragmentation . . . willmake "mass marketing" more expensive and difficult, therefore we will have to finddifferent ways to reach and influence consumers'. Another respondent (strategicplanner, >10 years' experience) predicted that continuing media fragmentationwould result in 'brand activity being spread too thinly and being controlled by awider range of specialists who are all pedalling their own agendas'.

A number of respondents offered comments on a predicted increase in nichemarketing. One respondent (strategic planner, 7-10 years' experience) suggestedthat the advertising industry will come to be characterised by 'more specialisation asmedia channels become more diversified and markets and target audiences becomemore niche'.


The 2008 data reiterated the 2003 findings regarding personalisation, with thecomment that online marketing and media facilitate personalised target marketing.One senior marketer's response was:

My biggest issue around digital/new media is how it can be used to target specificbrand users more effectively. If mass media is to 'all ' and digital is more aboutone-to-one, how do you actually find those using your brand in a B2C business?Then how can they be influenced more effectively than [they are by] massmediums?

This suggests marketers recognise the personalised nature of online marketing butstruggle when trying to establish how to attract customers from traditional/above-the-line media to commence using digital media in one-to-one relationships. Seniormarketers also appear to be struggling with understanding if they have to adjust theprocess of consumer persuasion from the principles they apply to traditional media tothe less familiar digital media when they utilise one-to-one relationships.

One respondent raised the issue of over-commercialising social networks:

'We have done partnerships with MySpace, placed ads on community sites, andcreated purchase applications in Facebook. But there is a risk that communitieswill be abandoned if they are too commercialised. How far should marketers go inthese spaces?'

Another respondent was challenged by understanding what is required, possiblyfunctionally and emotionally, to motivate the consumer to move through a processthat results ultimately in a sale. 'Increasing sales conversion (and maximising ROI) inthe digital space, that is, how to turn the online information search activity into a salesoutcome, particularly for high(er) involvement purchases (e.g. via easy-to-navigate,secure-to-purchase environment, etc)'. The same marketer may be suggesting asolution in another part of their response: 'Consistency of customer/brandexperience across all channels (i.e. new media and traditional forms)'.

The personalisation theme derived from the literature considers personalisation asmore than simply personalised messages. Through sharing greater levels of detailregarding their needs, consumers become co-producers with marketers. Permissionmarketing would be a given. The 2003 practitioner responses considered that mass


marketing would be less effective and took a negative view of personalisation. Theysaid a move from mass marketing would be more difficult to conduct and moreexpensive within an environment of media fragmentation. Tbere would be dangersto brand consistency witb a personalised multi-cbannel non-mass-market approacb.Tbe 2008 responses support the 2003 findings by indicating concerns with measuringthe impact of online marketing and an uncertainty that tbe same consumer models,sucb as persuasion, applied online.

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As Swain (2004) reported, a commonlycontrol of marketing communication reinforces the need to measure marketers'efforts to reach consumers in non-traditional

held view that the consumer is taking

personalised media.Different demographic and psychographic market segments have different online

and offline media usage. Tbe traditional media mix utilises complementary strengthsand weaknesses of tools such as TV and newspapers. Now tbe media mix must includeonline marketing applications eacb witb individual strengths and weaknesses in amanner appropriate for each organisation's context and objectives. Consumers willbe more knowledgeable and, consequently, more demanding.

2. Measuring the value of online interactivity


Tbe largest number of responses concerned the growth of tbe Internet/electronicmedia and digital TV, and, in particular, 'greater interactivity as a result' of tbisgrowtb. How interactivity could lead to 'consumers baving greater control overwbat advertising information tbey receive' was of interest to many respondents. Forexample, one respondent, (creative, >10 )[ears' experience), predicted that with'changes to media consumption as a result of tbe Internet and e-business, theconsumer will be empowered to control wbat tbey consume. Advertisers willtberefore bave to earn and reward attention'

A sense of uncertainty or confusion regarding 'digital media' was evident in thecomments of several respondents, even amongst those in very senior positions. One(agency director, >10 years' experience), for example, acknowledged that 'thecbanges brougbt on by tbe rapid move to digital communications will be enormous',but went on to say, 'wbat tbose changes are, \Svho knows? All we can do is keep ridingthe wave and make sure we don't fall off and drown'. This uncertainty is all the morealarming given that a number of respondents predicted dire consequences for tboseagencies tbat do not adapt to cbanges brougbt about by digital media. Anotherrespondent (account planning, 7-10 years' experience) stated that 'agencies [that]do not understand and embrace tbe technology of new media and tbe principles ofone-to-one marketing will ultimately find tbemselves redundant'.


The stage-two findings developed the view of the 2003 findings regarding interactivityby emphasising specific new technologies and uses. Tbe growtb in Web 2.0 usage madeone marketer remark, 'I think creating a two-way dialog with customers in a relevantway is most important, and taking advantage of "networking" capabilities Web 2.0tecbnologies bave to offer'. The use of interactive technology and the facilitation ofviral marketing do raise evaluative challenges: 'With interactive tecbnologies it'sincreasingly easy to connect witb your target audience and even hold multi-waycommunication, but it can be difficult to rneasure tbe quality and impact of this


(interaction)'. It appears interactivity provides opportunities that are being grasped, aswell as uncertainties.

The literature considered interactivity to be related to relationship-buildingdatabases, obtaining attention and engagement, consumer control of marketingmessages, and knowledge acquisition. The literature suggested that the industryneeded to adapt to interactivity or become less relevant. The 2008 practitionerresponses agreed with the threat faced by advertising agencies, and confirmed theother aspects of interactivity foreseen in the earlier 2003 data. However, it was only inthe 2008 qualitative data that the impact of online marketing and specific technologiesbecame clear. In 2008, the complexity of measuring digital media in its diverse formsbecame apparent. Eor example, Davis and Yung (2005) and Davis and Sajtos (2008)highlight the link between TV and mobile telephony. Thus interactivity is not exclusiveto digital media, and can be stimulated by traditional media.

3. Linking search behaviour to sales through integration


IMC was a common interest among practitioners. One respondent (accountmanagement) predicted a 'move towards delivering true integration across allmarketing disciplines' and, further, that 'the IMC theory will become a reality'.Similarly, another respondent, also an account executive, spoke of the 'movetowards integration of promotional tools' and how 'direct marketing, promotion,advertising, and PR [might] work more in conjunction witb each other to strengthena brand rather than just advertising'.


Integration was a recurring theme in the 2008 data collection. The challenges werebest represented by the following three extracts of respondent comments: first,'Understanding how to best leverage the capabilities of new media and measure theimpact of new media re traditional media in terms (of marketing objectives)'; second,'how they (new media) differ and which target markets they are best suited to. Theconstantly morphing and expanding range of options presents a bewildering array ofchoice...'; and third, 'How does it overlap/extend old media TV, direct mail etc?'.

These responses highlight the uncertainty in marketers' minds regarding theintegration of online marketing. The literature considered integration in the form ofIMC to be in principle a worthy goal. However, political and skill-based barriersprevent its widespread effective adoption. The 2003 practitioner responses weremore positive than the literature would suggest in terms of the future success andadoption of IMC. In contrast, they were less positive in terms of the adoption ofinteractivity and personalisation. However, the 2008 responses showed the extent towhich marketers have struggled with the reality of integrating online. Possibly, therapid adoption of online marketing and digital media has resulted in more difficultiesthan anticipated. The diversity in new forms of online marketing could not have beenanticipated.

While some authors argue that integrated marketing is more complex yet morenecessary than ever before due to the proliferation of customer contact points(Chattopadhyay & Laborie, 2005), other research shows companies are notimplementing IMC well and it is 'at the crossroads' (McGrath, 2005). Possibly,online marketing will provide both the technological platform to integrate

Valos et al. Practitioner progíostications on the futute of online matketing 369

marketing communication at the same time as providing the technical tools fordecentralised decision making.

4. Developing more accurate ROi projections


A number of respondents spoke of client expectations that advertising outcomes mustbe tracked and measured. Eor example, one respondent (media research, >20 years'experience) suggested that there would be calls for 'greater accountability of eachfactor of the marketing mix, that is, what part does advertising play in sales versus thepart played by price, promotions, pack, distribution, and so on?' Similarly, another(account manager, 4-6 years' experience) spoke of clients demanding 'a greater degreeof accountability for the traditional brand-building ad budgets' and, further, 'acorrelation of revenue generated from expenditure which is specific to each and everyactivity'. The need for 'more professional or sophisticated campaign measurementsystems' was of concern to many.


Evaluation was the most commonly cited challenge faced by the 2008 marketers, bestrepresented by the following selection of responses: first, 'The major challenge isaccountahility of new media, that is, measuring the impact, reach, and frequency';second, 'Leveraging the Internet successfully. Reaching many through the companywehsite is costly but how do you measure the return; web-generated sales, hits, pagesread, unique browsers, ad revenue, SEO, traffic flow to and from your website'; third,'Evaluating the effectiveness beyond the click-throughs and beyond the directresponses'; and finally, 'YouTube/Eacebook/MySpace/blogs/ are now powerful brandinfluencers. How should I monitor what they say about my brand?'

These responses highlight the uncertainty in marketers' minds regarding roles ofemerging online marketing tools, as well as the impact each tool has. Marketers appearto be seeking key measures that link a number of sequential steps consumers gothrough, possibly in the form of conversion ratios, which lead to the ultimate goalsof sales and revenue. It makes sense that if marketers are confused about the roles ofdigital media in online marketing, they are similarly confused about how to measuredigital media. The literature considered the major aspect of evaluation to be the needfor more accountability with better quantitative measurement. Appropriatequantitative measures offer marketers the opportunity to rely less on soft attitudinalmeasures. The 2003 practitioner responses supported these sentiments. The 2008responses showed interest in behavioural measures that link attitudinal to financialmeasures for these new online media. Digital media require new performancemeasures, and performance must be evaluate^d alongside existing media.

5. Co-creating brand meaning


The 2003 responses did not provide muci emphasis on online branding issues.Possibly, they did not see significant change in branding online, that is, the samemarketing principles apply. This appears to be a dangerous assumption based on the2008 responses.



Branding in the online marketing environment was seen as a significant challenge. Therisks of losing brand essence in an intangible interactive environment were summed upby one respondent: 'It [digital media] has to help deliver a brand experience in a waythat is true to the brand, engaging for the consumer and compelling for the Board.'Another respondent was challenged by tbe acbievement of brand awareness:'Achieving brand awareness/cut-through amongst the highly congested Internet'. Tbeneed to set a communication strategy and budget allocation tbat balances competinggoals was also highlighted: 'The major challenge is to manage the balance of "brand"messaging and our core marketing activity in the online environment versus tbe morecommercial and/or traffic driven activity, particularly in areas that conflict with theformer'.

Tbese responses confirm online branding as providing uncertainties, in part causedby the ways consumers engage the brand in online scenarios and the lack of measuresfor online marketing and the diversity of online options. The literature predictionswere positive for tbe role of brands, but uncertain if brand architectures would moveto greater or less use of corporate versus 'house of brands' structures. In thesemarketers' responses, there were great uncertainties in terms of budget allocationbetween branding goals versus behavioural goals, achieving consistent engagingbrand experience across diverse customer touch points, and finally obtainingattention amongst online clutter.

The 2008 marketing responses seem to question if the same traditional brandingrules applied for online marketing. With the brand being encountered by consumers inrich media applications, some of which are controlled by the marketer, that is,corporate websites, and some controlled by consumers, such as Eacebook, marketersare uncertain about proactive and reactive brand strategies. However, communicationwill remain integral to brands, and brand managers will strive to understand and utiliseonline media more effectively in the future.

6. Working with land within) agency capabilities


The topic of 'agencies shifting away froni focusing strictly on advertising' and, inparticular, how they might focus instead on 'offering more complete marketingcommunications solutions' drew a number of responses. One (creative, >10 years'experience) saw the shift away from focusing strictly on advertising as being linked to'TV advertising [becoming] less dominant in the media mix'. Eurther, she predictedthat 'agencies will be moving into PR, multimedia, Internet sites, cable TV, and so on,as free-to-air TV loses its "hold" on major target markets'.

A respondent (media planning, > 10 years' experience) went so far as to predict that'advertising agencies as we know [them] will no longer exist'. This respondent foresawagencies becoming 'more integrated, offering services in all facets of marketing -advertising, direct marketing, design, and media planning and buying'. Respondentsoffered comments on the 'increasing unbundling of various agency departments -creative, strategic planning, media, and so forth - and their "outsourcing to specialisedshops"'.

A number of respondents predicted a continuing shift away from full-serviceagencies to the point where, as one strategic planner put it, 'they become loosenetworks buying in specialist skills'. Another respondent (creative, >10 years'


experience) presented a very similar viewpoint saying, 'I think agencies will breakdown into specialist satellite services, that is] creative, planning, strategy, media, andso on. It wiU be bought by clients or pooled bjy specialists on a needs basis'. Accordingto another creative, continuing 'unbundling' spells 'the death of the largemultifunctional agency' and heralds a time when 'clients [are] able to buy creative/

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strategic planning/marketing and media from smaller, focused, and separate"shops'".

Issues surrounding 'clients increasingly recognising and valuing the ability ofagencies to generate "ideas" and "creativityi"' were also common. One respondentsaid simply but emphatically, 'ideas not ads!'! Finally, a prediction from one (accountmanager, >10 years' experience) who said': 'Agencies realising the value of their"USP" - the creative product - and marketing themselves on this basis. As a result,marketers who have outsourced advertising through design studios at low servicefees realising the value of full service agencies and reverting to their use'.

The changing role of advertising agencies was a recurring theme. For example(account manager, 7-10 years' experience): 'agencies are redefining their roles andattempting to gain back their place at the boardroom table'. Similarly, anothersuggested that 'agencies will take on more of a business building role' and also that'agencies are looking to add more value to keep their clients' business'.

A number of respondents from account management predicted that the futurewould be a time of close working relationships between client and agency. Onerespondent said that 'the marketing divisions of clients and agency will work moreclosely. The agency will be expected to provide complete communications advice andexpertise'.

Another echoed a very similar line of thought in suggesting that 'agencies will beadditions to and strong contributors to clients' marketing departments. We will berequired to supply total communications packages - not just ads'.


The underlying structural and organisational turbulence was still present in2008 - as exemplified in this somewhat cynical response: The experts in mypartner media companies, for example [deleted], have been doing this for 12-24months, if you're lucky. Most experts are 20 years old! There are so many start-upcompanies in this space, who have no track record, that it's a high risk investment.What should be a great opportunity for agencies may not be realised by them ifmarketers are so dissatisfied they have to either develop online skills in-house oralternately blend internal skills with services from small creative or mediaboutiques.

Another respondent bemoaned the deanth of internal skills, which is why themarketers are seeking external guidancel 'Obtaining people who are skilledenough to integrate the new tactics offered by new media into marketingcampaigns. To get people who know how to best use new media'. The skills appearto be technical/IT, media planning and the ability to manage the marketingcommunication mix.

The literature suggested that agencies would no longer be seen as vital experts, andthey would need to demonstrate performance more tangibly. The 2003 practitionerviews were divided on what future agencies would look like. While a number ofrespondents felt agencies would offer more complete communication solutions to

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succeed, otber respondents believed agencies would be leaner and utilise outsourcingwitb specialist shops. The 2008 marketing responses highlight tbe lack of agencyexpertise and credibility in digital media, as well as the lack of internal skills indelivering and managing online marketing.

In summary, tbe 2008 data showed tbat most ofthe 2003 issues still existed in 2008,but bad matured and required different and more sopbisticated solutions to ones thatwould have worked in 2003. Some new technologies such as Web 2.0 offer newsolutions not envisaged in 2003, wbile at tbe same time making marketing morecomplex witb greater choices of evolving tools.

Theory-building implications and directions for future research

This study has used a longitudinal qualitative methodology to identify and describe keyonline marketing trends and cballenges facing marketers. In some areas, possible solutionsbave been suggested. Tbe following areas appear to be fertile areas for future researcb.First, do FMCG marketers differ from services marketers in terms of online strategy,tactics, and measurement? FMCG marketers often lack customer databases, and tbey aredependent on retailers as opposed to directly owned cbannels. Tbese differences baveimplications for customer contact. Second, does tbe complexity and diversity of onlinemarketing make 'fact or evidence-based' marketers more likely to succeed in tbe futurecompared to 'intuitive gut-feel-based' marketers? Third, does online marketing andthe diversity in online media make certain department structures and certainmarket segmentation bases less appropriate? Are customer-based organisationalstructures superior to product-based structures? Or are cbannel-based structures andsegmentation better? Wbat about a matrix structure? Or do marketers need to structurefirst by customer type and second by channel type? Finally, does tbe fragmentation ofmedia and proliferation of customer-contact points make 'branded bouse' architecture,for example Kellogg's, superior to 'bouse of brands' architecture, for example GeneralMills. 'Branded house' can get 'share of voice' more economically for all products in tbeportfolio in diverse media. Tbis protects larger companies and more pervasive brandsagainst nicbe competitors wbo witb a small budget can now afford to 'own' or saturateone form of diverse online media and get a higb sbare of voice, for example Facebook.

Managerial implications

Marketers recognise consumers are empowered and more demanding. By becomingfirst movers in each form of online marketing, tbey bope to leave tbeir competitorsbehind, still struggling witb tbe complexity of integrating and measuring onlinemarketing media. However, most marketers battle with 'selling' online media to tbeboard wbo are more comfortable and familiar with traditional media. Seniormarketers are uncertain if advertising agencies can belp tbem solve online marketingcballenges, and are turning to new 'digital think-tanks' for online expertise.

The collaborative potential inberent in Web 2.0 is ideally suited to youngermanagers witb Web 2.0 mindsets and capabilities. Companies such as Google andWikipedia sbow tbe ease witb wbicb Web 2.0 facilitates 'crowdsourcing' (Bonabeau,2009; Howe, 2008; Surowiecki, 2005), tbe process used to incorporate large numbersof consumers and users in collaborative endeavours online. In terms ofimplementation, tbe good news for marketers comes from Tapscott and Williams

Valos et al. Practitioner prognostications on the future of online nnarketing

(2008) who identify practical processes to harness and exploit the collaborativepotential of Web 2.0 and use it as a source of competitive advantage. In terms ofmeasurement of social media, Weber (2009) provides insights for managers to addresstheir concerns. Another way to overcome Web 2.0 confusion is to distinguish betweenoff-site and on-site communications. This is a way of seeing which online tools arerequired to step consumers through a consumer decision-making model, such as fromunaware to purchase. These tools are a mix of 'on site' such as website personalisationor 'off site' such as Google AdWords, behavioural targeting, or dynamic email content.Some online tools require customer details or existing relationships, while other

373

digital tools bring potential customers intotime for marketing managers to understand

contact with the organisation. It tookWeb 1.0, so no wonder the same is true

for Web 2.0.The marketing practitioner's overall aim is to create value through the acquisition

and retention of customers cost effectively. If this can best be achieved by harnessingthe full potential of online, so be it. The benefits of online such as its interactivity andcapacity for personalisation must be tempered with the challenges it presents inintegrating online with other activities of the firm, data management, andaccountability in its use.

Marketers are 'drowning' in behavioural and attitudinal measures and how toreconcile them when making budget allocations. Tbey are unsure if existingmarketing communication models, that is, advertising persuasion, consumerbehaviour, and 'reach, frequency, and impact' apply in online media. IMC was nevermore needed, but there are forces at work making it harder to achieve.

The future for advertising agencies can be seen as having both opportunities andthreats. They face threats if they do not adapt to changes presented by onlinemarketing and if they do not develop a clean identity as experts in this key area. Onthe other hand, the dramatic changes occurring within marketing communicationhighlighted by the senior marketer's responses forprovide an opportunityadvertisers to win back lost credibility. Thely can do this by helping the marketersdeal with the pressing online marketing challenges. However, first they need to definetheir role as either 'ideas factories', full-service agencies, or lean organisations with astrong reliance on outsourcing. Advertising agencies need to move beyond the currentperception of being a 'necessary evil' to a valu'ed business partner. They need to be ableto offer advice on both integrating and measuring diverse online media. Can they graspthe opportunity?

Limitations

One limitation of the study could be seen as the lack of quantification of the relativeimportance of the challenges discussed. On the other hand, the strength of thelongitudinal qualitative methodology allowed senior marketers to raise issues thatwere extremely important to them in an exploratory manner. This is appropriate insuch a dynamic area as online marketing. The methodology allowed marketers toprovide rich responses and personal perspectives. Eurther, the responses werecollected at two points in time, and this method allowed a comparison of onlinemarketing issues in 2003 and 2008 and considered how online marketing issues maychange in the future.


Conclusions

Whether the challenges faced by marketers in 2008 are transitory or ongoing will notbecome clear for a number of years. To say marketers are to blame for notunderstanding the impact of online marketing or for not being sure what to do maybe too hard a judgement on them, as the rate of change has been rapid. As far asintegrated solutions to the marketing-management issues created by the impact ofonline marketing are concerned, it is important to see the research themes as parts of awhole. There are obvious overlaps, and there is interconnectedness between thethemes in terms of possihle practitioner responses. It may be that an IMC approachis required to resolve these issues, as it can best coordinate diverse media, marketingobjectives, and marketing metrics. However, the changes in online and theimplementation issues raised in the findings make IMC even harder to implement,with greater numbers of channels and more external suppliers to deal with. Further,emerging digital media, greater numbers of niche segments, as well as personalisationmake marketing communication more complex. CRM systems have decision-supportcapabilities where data captured by bebaviour and merged with attitudinal data can bemanipulated in the manner of an expert system. With the increase in customer touchpoints and channel complexity, a program-planning or CRM-system approach seemstimelier than ever and may provide a solution.

Conversely, another possible solution might be to ignore holistic integratedplanning models and focus on solving online challenges one at a time, almost inisolation. It may be that differences in organisational context, that is, market share,industry, positioning, and channel strategy mean some companies only face one or twoof the online marketing challenges in a critical way, and a focus on these few narrowbut important challenges is enough to achieve their marketing goals.

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About the authors

Michael J. Valos is senior lecturer in marketing at Deakin University in Melbourne, Australia,where he teaches Promotional Strategy and Consumer Behaviour. His research interests includedigital marketing, multichannel marketing, and health promotion. Prior to becoming anacademic, he was a marketing executive in the telecommunications sector in the areas ofproduct management, business planning, and marketing communications. He has won anoutstanding paper award from Emerald Publishing for the journal Marketing Intelligence andPlanning, and has a forthcoming article in the Journal of Strategic Marketing.

Corresponding author: Michael J. Valos, School of Management and Marketing, DeakinUniversity, 221 Burwood Highway, Burwood 3125, Australia.T -h61 3 9244 6168E [email protected]

Mike Ewing is professor and head of the Department of Marketing at Monash University inMelbourne, Australia. His research interests include marketing strategy, brand management,marketing communications, health promotion, and the technology-communications interface.He has published more than 80 articles in refereed international journals, including InformationSystems Research, the Journal ofthe Academy of Marketing Science, the Journal of AdvertisingResearch, the Journal of Advertising, the Journal of Business Research, Industrial MarketingManagement, the European Journal of Marketing, and the Journal of Strategic Marketing.

T 4-61 3 9903 2547E [email protected]

Irene Powell is senior lecturer and deputy head in the Department of Marketing at MonashUniversity in Melbourne, Australia, where she teaches integrated marketing communication.She received her honours degree in marketing from Strathclyde University in Scotland and hermaster's degree in communications from Monash University. Irene's research interests are in thefields of integrated marketing communication, advertising, media control, and marketing skillsdevelopment. She has published in the Journal of Advertising and the Journal of MarketingEducation, amongst others.

T +61 3 9903 2547E [email protected]

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