ALEXA KIERZKOWSKI, SHAYNE MCQUADE, ROBERT WAITMAN, AND MICHAEL ZEISSER
The McKinsey Quarterly, 1996 Number 2, pp. 180-183
Many companies are waking up to the potential of the interactive consumer market. Not only are the numbers of users of on-line and Internet services soaring, but the majority of people who are subscribing to these services tend to be young, well-educated, and richer than average. In short, they make particularly good marketing targets.
Interactive media is likely to revolutionize marketing for many consumer companies because it allows marketers to deliver real-time, personalized services and content, one consumer at a time. It is what we call digital marketing. Digital marketing leverages 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 on line. However, to capture the benefits of digital marketing, companies must integrate interactive media into their existing businesses and marketing programs. And that is difficult to achieve.
Most consumer companies are struggling to know what to do and how. The old models of marketing simply do not work in this new world, and as a result most of today's digital marketing applications are uninspiring (as anybody who has ever been on the Internet can probably attest), falling far short of the potential of interactive media. Research is being conducted to define a new marketing model that will help build and evaluate digital marketing applications.
TYPES OF DIGITAL MARKETING
Several broad types of attractive digital marketing opportunities already exist, and there is evidence that marketers who aggressively pursue one or more of these opportunities are starting to make profits.
First, marketers can use interactive media to provide better service at lower cost by delivering information about a product or service. UPS, for example, uses an Internet-based service to allow customers to track the whereabouts of their packages [ILLUSTRATION FOR EXHIBIT A OMITTED].
A second opportunity is to build relationships with on-line consumers. Interactive media can be used to identify attractive users or prospects (an automotive company can learn the names of interested car buyers and forward them to the closest dealer); it can enhance customer loyalty by providing extra services; and marketers can use what they learn about their consumers to cross-sell new products or services.
Third, marketers can use interactive media as a new channel. In 1995, Hot Hot Hot, a small company that produces sauces, generated some 30 percent of its revenue from sales through its Web site. And using interactive media, airlines are increasingly bypassing travel agents to sell tickets, thus saving significant commission costs. For example, United Connections, a disk-based service allowing travelers to make their own bookings, is estimated to save airlines up to $50 for a typical $500 round-trip fare. …