Academic journal article The McKinsey Quarterly

Marketing to the Digital Consumer

Academic journal article The McKinsey Quarterly

Marketing to the Digital Consumer

Article excerpt

Let's admit it: most Web sites are duds

The task is to attract and engage, not to price and promote

Relating to "chiliheads"

Should your online marketing be a separate unit?

The rapid development of interactive media such as online services and the World Wide Web has taken many consumer marketers by surprise. While some marketers are still wondering what to do and how to do it, others are moving forward - but often with mixed success.

Our recent analysis of 95 Fortune 500 consumer marketing companies with product or service-related Web sites reveals that consumer marketers fall far short of leveraging the full capabilities of interactive media. While over 90 percent of all the digital marketing applications examined provided product or service information and featured basic e-mail capabilities, only about half offered links to other sites and non-product-related content, and fewer than half provided any sort of interactive content, such as a game or a diagnostic requiring some user input. Most revealingly, only a handful of the examined sites made an effort to seriously collect information about their users, and fewer than 5 percent provided an opportunity to allow user-to-user communications, a unique - and one of the most popular - characteristics of interactive media.

Most consumer marketers therefore still approach interactive media through the static, one-way, mass-market broadcast model of traditional media. The results of such an approach are uninspiring applications that fall far short of the new media's potential. Shrewd marketers will instead learn to create entirely new forms of interactions and transactions with consumers. To do so they'll need a new marketing model more appropriate to the new consumer marketspace(*) and new approaches to integrating interactive media into their business system and marketing programs.

We believe that digital marketing is an attractive proposition for more consumer product or service categories than is typically assumed. In fact most consumer marketers - be they in financial services, travel, music, and books, even food and beverages - should be exploring how to capture the digital world's business opportunities.

Evolution's grip

For marketers of consumer goods or services, the emergence of a new consumer marketspace is no longer a matter of speculation or hype. In the consumer world, users of many popular branded products subscribe today to interactive media at rates two to three times the national average (Exhibit 1). By 2000, there will be between 30 and 40 million of such "digital" consumers.

Digital consumers are, generally speaking, attractive for marketers (Exhibit 2). Digital consumers are more likely than their non-wired counterparts to spend more to get the best and to make an effort to use new devices and methods. Household income levels among current subscribers to online services and Internet users are considerably higher than average, as are education levels. Meanwhile, key technological barriers are falling - particularly the speed of content delivery. By the year 2000, more than 50 percent of these digital consumers are expected to access interactive media at speeds five to 500 times faster than they can today.

A back-of-the-envelope calculation, based on published estimates,(*) suggests that a substantial Internet economy is emerging. Potential revenues across infrastructure, content, and trade businesses suggest an estimated $40 to $50 billion Internet economy in place by the year 2000.

The rise of this consumer marketspace is clearly aligned with the evolutionary progress of the marketing function from a mass-market model to more interactive personalization of goods, services, and interactions. With interactive media, marketers can dynamically deliver personalized services and content, in real time, one consumer at a time. This is due to the unique and powerful characteristics of interactive media: it is addressable, meaning that each user can be identified and targeted separately; it allows for two-way interaction; services can be tailored for each individual customer; and purchases can be made and influenced online (Exhibit 3). …

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