evolution of
digital marketing

Rishad Tobaccowala Presidentr, SMG IP

Christian Kugel Director(Insights & Analytics), Starcom IP

era entering the
consumer
Next year will mark the 10th anniversary of the Mosaic Browser, which gave birth to the Web age. For some it seems like yesterday and for others it feels like entire eras have elapsed during the past decade.

While the digital communication age is yet in its infancy, we have actually lived through three eras, as consumers, commerce and culture adapted to the “domestication” of the Internet-until then a decades old academic and military infrastructure-which the browser made possible. These eras of roughly 1,000 days each are:

Era One: Birth and the Technology Leap (1996-1999)
Era Two: Growth and the Explosion of Commercial Market (2000-2002)
Era Three: Evolution and the Age of Pragmatism (2003-2005)

While there are several perspectives with which we could discuss each era, we will view these through the lens of how consumers and marketers adopted the medium, including what they did and expected, why they did what they did, and how success was measured. At the conclusion of the article we will attempt to forecast what comes next and what marketers may need to do.
Chart One summarizes the key trends of the three eras.
Era One, Birth: Sometime between 1996 and1998 a few million people came upon something wonderful called the World Wide Web. At the time it consisted of lots of black text and thumbnail pictures on grey background that linked to other wonderful worlds filled with the same. One click and the world was at one’s fingertips. This was an era that focused on the “newness” of the Internet-both to consumers as well as to marketers. Because it was primarily viewed as a technology rather than as enabling mechanism, content was an afterthought. The act of “surfing” and discovering was fulfilling enough for consumers. The experience was generally a static one. Content didn’t refresh regularly and it tended to be limited to text (with sporadic images). The early pioneers in this era were sites like Wired and a now forgotten brand called Zima, a malt beverage that became famous because it aggressively utilised the web. It was not what you said but whether you were on the Web.
The emphasis for commercial businesses was in securing domain names, getting a minimal Web site up and ensuring that they had an online presence as a defensive position. Often the site contained pictures of the board, addresses and telephone numbers and pages and pages of text. Staking a spot in this new frontier and advertising the URL in print ads was the predominant form of “marketing.” This allowed many CEOs to ensure that they could state at the next party that they had a worldwide presence-what we called “cocktail puffery.”
The measurement metrics associated with this era tended to be “internal metrics” without any context-things specific to Web traffic, load times, etc. “Hits” were the big thing. Hits at a site were like money in the bank.
This rudimentary content and marketing had begun to attract notice. By 1998 in the US 11.5 million individuals were spending an average of 25 minutes a day with the Web. And it was clear that we were on the verge of something big.
The big news in this era had been the browser that makes the World Wide Web possible and accessible.
Era Two, Growth: These were the golden years as the World Wide Web grew in terms of content, expertise, and understanding of the end user, measurement, and technology available. The beginning of this era was defined by unbridled excitement about the potential of the Internet-from users as well as marketers. A gold rush catalysed by venture capitalists and equity markets lubricated and magnified the potential worldwide Internet, and users increased 50 per cent during this period.
In hindsight, this era appeared to be less about marketing to consumers than about marketing the companies that hoped to leverage excitable equity markets. Spinning off digital units, giving everything a dot-com moniker and issuing breathless press releases about new initiatives was the focus of digital marketing.
However, progress was being made in moving commerce and utility online. The main commercial advance was the increased activity of selling online, either directly like Amazon or via auction like eBay. Most marketers who could transact online followed one of these models, with consumer marketers selling directly and business-to-business markets setting up different forms of auctions and bidding from suppliers. The efficiencies of lower cost and more convenience allowed for significant consumer uptake in areas such as travel and finance; the ability to be empowered with information became a utility for consumers, particularly in the areas of car shopping and medical awareness. Car dealers saw nearly half of their customers walk in with pricing and other data from sites like Edmunds, and doctors found patients queried them with questions about their ailments aided by information collected on the Internet. Grudgingly marketers began to realise that not only did digital technology help them distribute and sell efficiently but also empowered and emboldened consumers.
Because this era is scarred by the decline of the 1990’s bull market, influence shifted from dotcoms to traditional marketers. However, during this phase, traditional marketers took a bifurcated approach. Many approached the Internet as something that required separate, dedicated departments, which focused on initiatives such as building eCRM databases, proprietary content and audiences to ensure their position as digital leaders in their respective categories.
Consumers began to expand their Web activities from communication (e-mail) to commerce and content. They found deeper content as websites proliferated and fragmented. They began to become increasingly comfortable with buying online. The pictures became better and bigger and bits of animation sprouted everywhere.
This second era-while clearly driven by commerce and greed-expedited growth and consumer uptake. As the chart below indicates, in the US alone, online usage increased six fold in three years and the average user spent more than an hour online.
Era Three, Evolution: After the excesses and hype of the bubble years, we are now in the age of marketing pragmatism and evolution. But while many marketers may have lost sight of consumers as they fixated on new “models” and Wall Street, consumers continued to embrace the Web. Web usage increased and more than doubled in the past few-supposedly dark-years. More importantly, marketers began to realise that they were right in that the Internet was something big. In fact, so big that increasingly everything digital was being connected to the Web whether it is games or music, and so big that it needed to be core to their future strategies and no longer separate initiatives. Thus, integration with the marketing strategy, organisational structure and how people consume Internet content has become critical for marketing.
Most importantly, as broadband allows for an always-on connection to the Internet and as more and more utilities, content and communication migrate to the Web, consumers have integrated the Web into their lives. They check weather forecasts and sports scores, look up product information, shop, communicate, post photographs and listen to music on the web. It is no longer a strange toy but a part of life, and marketers are following this lead.
An example is how airline sites have moved from using the Web to decrease costs by providing booking and other information online to now being the primary contact most consumers have with the airline. They book their fares, get upgrades, monitor their miles, print their tickets and choose their seats online. For many companies like Delta, which aggressively promotes its Web site, Delta.com is in many ways the airline.

So what is next? The Consumer Empowered and Connected Era
Through the ups and downs of the past decade, two trends have grown stronger. Both of these trends will significantly impact the future of marketing. First, consumers are becoming increasingly empowered via the choice, control and convenience the Internet offers. Second, most entertainment and communication devices are becoming digital and connected-either hard-wired or wirelessly-to the Internet. Today, it is phones and gaming consoles. Tomorrow, it will be television. Digital marketing, which today has been delivered via net-enabled computers, will spread to every connected electronic device.
Both of these trends will make consumers Gods of all they survey. They will have access to a world of information as well as other consumer insights. And technology that sat on a Cray Supercomputer will reside on their digital mobile device. They will control marketing and, to get their attention, marketers will have to be particularly insightful and innovative. In such a world, only by understanding consumers and giving them something of value-literally paying tribute to the new Gods-will marketers succeed.
In the U.S., marketers have begun grappling with these highly empowered and connected consumers as they investigate embedding their product into entertainment-a trend called branded entertainment. If commercials are skipped, incorporate into programming. Word-of-Mouth marketing, leveraging broadband Internet to deliver compelling experiences and exploiting video gaming are all areas where marketers are focusing.
Whereas the first era was driven by technology, the second by commercial markets, and the third by pragmatism, the next era will be all about the Empowered and Connected Consumer.