Advertising and the Internet · advertising agency will need to change along with the adoption and usage of this new interactive media channel. Agencies are now being forced to consider

Advertising and the Internet:

A study of agency-client expectations of the Internet

as a promotional tool.

Jennifer Michelle Browne

B.Bus., Queensland University of Technology 2006

School of Advertising, Marketing and Public Relations

Gardens Point Campus, Brisbane

Queensland University of Technology

Submitted in fulfilment of the requirements of the degree of Masters of Business (Research)

December 2006

The work contained in this thesis has not been previously submitted to meet

requirements for an award at this or any other higher education institution. To the

best of my knowledge and belief, the thesis contains no material previously

published or written by another person except where due reference is made.

___________________________

Jennifer Michelle Browne

December 2006

ABSTRACT

i

ABSTRACT

Undoubtedly one of the most significant developments to affect marketing

worldwide in the 21st century has been the development of the Internet. As a

communication tool the Internet is emerging as a new challenge to mass media

advertising. As a result advertising agencies need to readdress their techniques,

services and agency structure. Additionally, the shape and form of the traditional

advertising agency will need to change along with the adoption and usage of this

new interactive media channel. Agencies are now being forced to consider

broadening their service offerings to clients. Apart from widening their service

offerings, advertising agencies are being driven to invest in building and

sustaining valuable client relationships to establish client loyalty, with profit and a

healthy bottom-line being the ultimate objectives. Bush, Bush and Harris (1998)

point out however, that whilst a growing number of companies are interested in

developing an online presence, significant confusion remains about what this new

medium will offer stakeholders in the advertising industry. The study undertaken

in this thesis explores the relationship between two influential stakeholders in the

advertising industry - advertising agencies and their clients.

To explore this relationship, the study modified Parasuraman, Zeithamal and

Berry’s (1988) SERVQUAL model to explore whether gaps exist between

agency-client expectations of the value of the Internet as a promotional tool. The

SERVQUAL model, which was designed for measuring gaps between service

expectations and perceptions, was adapted for use in the business-to-business

environment (B2B). In the marketing literature there is little evidence of B2B

research in relation to agency-client relationships, nor has there been significant

scholarly work exploring the effect of the introduction of the Internet as a

promotional tool on the agency-client relationship. The research undertaken in

this study aims to respond to this gap in the marketing literature by addressing the

broad research question: “How will the introduction of the Internet as a

promotional tool impact agency-client relationships?” Undertaking a review of

agency-client expectations of the value of the Internet will ascertain whether gaps

ABSTRACT

ii

exist between agency and client expectations of the value of the Internet as a

promotional tool. The discovery of gaps in the agency-client relationship in

relation to Internet perceptions will indicate potential opportunities and challenges

that need to be addressed by advertising agencies interested in extending their

advertising services to embrace the Internet as a promotional tool.

A major assumption in this inquiry was that gaps would exist between agency and

client perceptions of Internet value. In particular, that advertising agencies would

perceive the Internet to be a more valuable promotional tool than their clients.

This assumption was informed from mass media and industry press, which

indicated that advertising agencies were embracing new advertising creative in

website design and strategic marketing activities using interactive media such as

newsgroups and email to reach customers. However, the research of Bush et al.

(1998) and Ducoffe (1996) suggests that little is known about the value of these

Internet-based activities. Such thinking raises questions, such as: are advertisers

feeling compelled to jump on the Internet bandwagon because of its popularity, or

are businesses’ desires to use Internet advertising a manifestation of Internet

hype? To begin to answer these questions advertising industry stakeholders need

to identify whether gaps do exist between agency and client perceptions of the

value of the Internet as a promotional tool. The existence of such gaps could lead

to tension in the agency-client relationship, which may ultimately mean a loss of

client accounts for the advertising agency. Identifying and remedying such gaps

could therefore aid in ensuring long-term and profitable working relationships

with the agency’s clients.

To undertake this advertising industry research and respond to the research

questions in this study an international advertising agency network, made up of

206 offices in 90 countries and a selection of their clients, were recruited to

participate in the study. A two stage survey method approach was adopted

because it was a time-efficient and affordable method for collecting detailed

information from a dispersed network of professionals. The survey tool was a

web-based questionnaire which was firstly submitted to a selection of advertising

ABSTRACT

iii

agencies within the international agency network. On completion of the

questionnaire, agencies were asked to provide contact details for their top three

billing clients. The second stage of the survey research involved the submission of

a client questionnaire to the client contacts provided by the advertising agency.

Both questionnaires used a modified SERVQUAL multi-item scale to measure

service expectations. Discrete agency and client questions were also included in

the respective questionnaires to situate the SERVQUAL analysis within the

context of Internet usage, value perceptions and organisational characteristics (e.g.

agency size, advertising spend, experience in using interactive media).

The major finding of this study is that within the international advertising agency

network there were no significant gaps in agency-client expectations concerning

the value of the Internet as a promotional tool. Whilst several statistical analyses

were undertaken, including bivariate and multivariate techniques such as

Pearson’s Chi-Square cross-tabulations, independent t-tests and ANOVAs, no

statistically significant results are reported. In fact, it was found that advertising

agencies and clients have similar expectations of the value of the Internet as a

promotional tool. Gaps actually exist in relation to the clients who use the Internet

as a promotional tool and agencies who supply Internet advertising services.

Many agencies within this international agency network were found to be actively

using the Internet, but their Internet advertising functions were not being provided

by their traditional advertising agency. Descriptive analyses reported in the

findings from this research study indicate that advertising agencies in this

international network need to better understand their clients’ Internet promotion

needs. This will ensure the establishment of healthy, profitable and long-term

agency-client relationships in the future.

The research findings from this study offer advertising agencies worldwide insight

into client expectations of the Internet, as well as other agency services.

Furthermore, the findings reported contribute to the current small body of research

in relation to B2B relationships in the advertising industry. The groundwork is set

for future analysis of agency-client relationships in the advertising industry. In

ABSTRACT

iv

summary, while gaps between agency and client expectations of the value of the

Internet as a promotional tool were expected, this research study found that

agency and client expectations are quite similar. Analysis did reveal that one

important factor, which influences the agency-client relationship, relates to the

provision of Internet advertising services. Specifically, when an agency is not

responsible for developing and maintaining clients’ Internet advertising, these

clients are utilising services from external providers of Internet services. These

new stakeholders, who provide specialist services (i.e. graphic design houses,

Internet advertising specialists and client’s in-house Internet services), are

changing the competitive environment of advertising services in the industry.

Another interesting discovery, specific to the sample population, was that one

third of agencies within the study did not provide Internet advertising services to

current clients. However, these agencies have clients that use Internet advertising.

On the one hand, this finding indicates that opportunities exist for these agencies

to extend their service portfolio to embrace Internet advertising. However, it also

raises an important question: that is, have these agencies created greater

competition by not providing a full service communication portfolio for clients?

These factors, and other methodological issues will inform directions for future

research to explain the influential role of the Internet within the agency-client

relationship in the advertising industry.

ACKNOWLEDGMENTS

v

ACKNOWLEDGEMENTS

Leo Burnett, founder of the worldwide Leo Burnett advertising agency network

once said that “advertising is the ability to sense, interpret… to put the very heart

throbs of a business into type, paper and ink”1. My passion for the very forces

behind advertising was the contributing factor that led me to study the influence

that the introduction of the Internet as a new promotional tool and advertising

medium, is having on the advertising agency-client relationship. Another famous

adman Bill Bernbach, founder of the DDB Worldwide agency network also said

“just because your ad looks good is no insurance that it will get looked at. How

many people do you know who are impeccably groomed … but dull?”2 There are

several factors that can affect the status of the agency-client relationship, which in

turn effects the period and profitability of the relationship. My interest in the use

of the Internet as a new advertising medium and the existence of many unseen

factors that can affect the agency-client relationship has now culminated in the

detailed body of knowledge that follows in this thesis.

This contribution to advertising research has evolved over many years of part time

study, during which I have experienced daily, the wonder and magic of working

in the exciting and sometimes exhausting, advertising industry. A dynamic

industry, which continues to teach me, shaping my views and allowing me to

grow as both a consumer and a salesperson. The data and results obtained from

this research study provide invaluable information for advertising agencies in

managing agency-client relationships.

While partaking in the design and execution of this research study, I was fortunate

to work with three supervisors, Dr Ken Hendersen, Dr John Harrison and Dr

1 Leo Burnett cited in Kufrin, J. (1995). Leo Burnett: Star reacher. Chicago, IL: Leo Burnett

Company, Inc. p.54. 2 Bill Bernbach cited in DDB Worldwide Communications Group. (1989). Bill Bernbach said…

(Corporate publication). New York: DDB Worldwide Communications Group.

ACKNOWLEDGMENTS

vi

Josephine Previte. These supervisors shared with me their professional

knowledge, industry disciplines and expertise. Their guidance, support and

understanding of the advertising industry was invaluable and greatly appreciated.

Special thanks to Dr Josephine Previte for helping me to review and pull together

the final strings of this thesis for submission. I would also like to express a very

special thank you for the statistical support provided by Dr Stephen Cox, who

introduced and re-introduced me to the statistical concepts and research

methodologies that have been utilised in this research study.

I am indebted to a very special friend of mine, one of my oldest and dearest

friends, Dr Megan Cleaver Sellick. Without your wide academic knowledge,

assistance, support and encouragement, I would never have completed this

research study. Thank you Megan - you’ll never ever be forgotten.

Finally, thank you to my network of family and friends, who over the period of

this research study has grown in size and love. Thank you for providing constant

encouragement, understanding and support. To my parents, two of the most

important people in my life, thank you for everything, particularly your support

and understanding, as well as your constant nagging to finish my studies and get

on with life! To my husband, thanks for listening and for just being there while I

wrapped this study up. And I would like to conclude by dedicating all of the years

of study, which have culminated in this research to my loving sister, Belinda,

whose own personal strength and determination was a great inspiration to me.

TABLE OF CONTENTS

vii

TABLE OF CONTENTS

Chapter One: INTRODUCTION................................................. 1

1.0 Introduction ................................................................................................. 1

1.1 Background and Research Questions.......................................................... 2

1.2 Research Design.......................................................................................... 5

1.3 Thesis Outline ............................................................................................. 6

1.4 Summary ..................................................................................................... 7

Chapter Two: LITERATURE REVIEW .................................... 8

2.0 Introduction ................................................................................................. 8

2.1 Business-to-Business Marketing................................................................. 9

2.2 Adoption of the Internet as a Promotional Tool........................................ 11

2.2.1 Integrated Marketing Communication ............................................................... 12

2.2.2 Interactivity in Relationships ............................................................................. 14

2.3 The Advertising Industry .......................................................................... 16

2.3.1 Agency Service Provisions................................................................................. 19

2.3.2 The Types and Styles of the Advertising Agency .............................................. 22

2.3.3 Establishing Advertising Agency-Client Relationships ..................................... 25

2.3.4 Maintaining Advertising Agency-Client Relationships ..................................... 27

2.4 Influence of the Internet on Advertising Agencies ................................... 30

2.4.1 Role of Interactivity in the Advertising Agency ................................................ 33

2.5 Implications of the Internet for Agency-Client Relationships .................. 36

2.6 ‘Value Adding’ and Perceptions of Internet Value................................... 38

2.6.1 What is ‘Value Adding’?.................................................................................... 38

2.6.2 The Provision of Value Added Services ............................................................ 39

2.6.3 Internet Value..................................................................................................... 40

2.6.4 Measuring Gaps Between Value Perceptions..................................................... 41

2.6.5 Closing Gaps to Sustain Longevity in the Agency and Client Relationship ...... 46

2.7 Summary ................................................................................................... 47

TABLE OF CONTENTS

viii

Chapter Three: METHODOLOGY........................................... 48

3.0 Introduction ............................................................................................... 48

3.1 Theoretical Perspective ............................................................................. 48

3.2 Research Design........................................................................................ 49

3.2.1 Qualitative Data Gathering Approaches............................................................. 50

3.2.2 Quantitative Data Gathering Approaches........................................................... 51

3.3 Survey Sampling and Procedure ............................................................... 52

3.4 Rationale for Survey Research Method .................................................... 53

3.4.1 Web-Based Survey Method ............................................................................... 54

3.5 Web-Based Survey Administration .......................................................... 55

3.6 Questionnaire Details ................................................................................ 59

3.6.1 SERVQUAL Measurement and Item Adaptation .............................................. 60

3.6.2 Agency Specific Questionnaire Items ................................................................ 62

3.6.3 Client Specific Questionnaire Items................................................................... 64

3.7 Ethical Considerations .............................................................................. 66

3.8 Limitations in Methodology...................................................................... 67

3.9 Summary ................................................................................................... 70

Chapter Four: ANALYSIS OF DATA ...................................... 71

4.0 Introduction ............................................................................................... 71

4.1 Quantitative and Qualitative Data Analysis.............................................. 71

4.2 Descriptive Statistics................................................................................. 72

4.2.1 Sample Population ............................................................................................. 72

4.2.2 Sample Descriptions........................................................................................... 73

4.3 Description of Agencies’ Use and Opinions of the Internet ..................... 76

4.3.1 Agency Provision of Internet Advertising Services ........................................... 78

4.3.2 Agency Value Perceptions of the Internet.......................................................... 81

4.4 Description of Clients’ Use and Opinion of the Internet .......................... 84

4.4.1 Provision and Management of Internet Services................................................ 88

4.4.2 Clients’ Value Perceptions of the Internet.......................................................... 90

4.5 Relationship Analysis of Agency-Client Perceptions ............................... 91

4.5.1 Provision and Utilisation of Internet Services.................................................... 92

4.6 Factor Analysis ......................................................................................... 93

4.6.1 Reliability Analysis ............................................................................................ 94

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ix

4.7 Hypotheses Testing ................................................................................. 100

4.7.1 Hypothesis 1: Exploring Internet Value Perceptions ....................................... 103

4.7.2 Hypothesis 2: Examining the Internet Experience ........................................... 104

4.8 Qualitative Analysis ................................................................................ 107

4.9 Summary ................................................................................................. 110

Chapter Five: CONCLUSIONS AND IMPLICATIONS....... 112

5.0 Introduction ............................................................................................. 112

5.1 Value Perceptions of the Internet as a Promotional Tool ....................... 114

5.2 Service Expectations of the Internet as a Promotional Tool ................... 117

5.2.1 Differences in Agency-Client Expectations of the Internet.............................. 117

5.2.2 Impact of Internet Experience on Service Expectation .................................... 119

5.3 Implications............................................................................................. 121

5.3.1 Implications for Advertising Theory and Practice ........................................... 122

5.3.2 Implications for B2B Research ........................................................................ 127

5.4 Research Limitations............................................................................... 128

5.4.1 Interpretation of Agency-Client Response Discrepancies................................ 130

5.5 Future Research....................................................................................... 132

5.6 Summary ................................................................................................. 135

REFERENCES............................................................................. 136

APPENDICES .............................................................................. 143

APPENDIX A: Web-based Agency survey questionnaire ........................ 143

APPENDIX B: Web-based Client survey questionnaire .......................... 151

APPENDIX C: Survey coding for advertising agency questionnaire ............ 158

APPENDIX D: Survey coding for client questionnaire ........................... 168

APPENDIX E: Pre-survey notification ............................................. 175

APPENDIX F: Email call to participate - Agency ................................ 177

APPENDIX G: Letter of introduction from QUT Supervisor .................... 179

APPENDIX H: Agency email reminder ............................................ 181

APPENDIX I: Email call to participate - Clients ................................. 183

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x

APPENDIX J: Procedures in managing surveys of Agencies and Clients ..... 185

APPENDIX K: Modified SERVQUAL questions ................................. 188

APPENDIX L: Countries from which the survey sample originated ............ 193

APPENDIX M: Descriptive statistics – Figure 4.1................................. 195

APPENDIX N: Descriptive statistics –Agencies who have recently pitched

Internet advertising ................................................. 199

APPENDIX O: Descriptive statistics – Figure 4.2................................. 200

APPENDIX P: Descriptive statistics – Figure 4.3................................. 202

APPENDIX Q: Descriptive statistics – Analysis of client Internet use

contributing to sales ................................................ 204

APPENDIX R: ANOVA of Internet use and non-use ............................. 205

APPENDIX S: Qualitative statements – Agency respondents ................... 207

APPENDIX T: Qualitative statements – Client respondents ..................... 213

LIST OF TABLES

xi

LIST OF TABLES

Table 2.1: Overview of three most common agency types……………..…......24

Table 4.1: Summary of agencies from international network available to

consider in survey sample …………………………………………74

Table 4.2: Number of client accounts held by agencies.................................... 75

Table 4.3: Analysis of the proportion of agency billings derived from the

agency’s top three billing client accounts ........................................ 76

Table 4.4: Agency responses relative to the percentage of clients who advertise

on the Internet .................................................................................. 77

Table 4.5: Analysis of agencies who responded that they have clients who

advertise on the Internet ................................................................... 79

Table 4.6: Agency responses relative to time period for provision of Internet

advertising services .......................................................................... 81

Table 4.7 Agency responses relative to the number of their top three billing

clients who advertise on the Internet................................................ 82

Table 4.8 Agency responses relative to agency billings attributed to Internet

advertising ........................................................................................ 82

Table 4.9 Analysis of agency perceptions of Internet value ............................ 83

Table 4.10 Analysis of agency understanding of their clients’ perception of

Internet value.................................................................................... 83

Table 4.11 Agency responses relative to the percentage of clients who

perceive the Internet as a valuable promotional tool ....................... 84

Table 4.12 Summary of agency and client surveys received ............................. 85

Table 4.13 Analysis of time period clients have been with current advertising

agency .............................................................................................. 86

Table 4.14 Analysis of clients who use the Internet to promote or sell their

products/services .............................................................................. 86

Table 4.15 Analysis of time periods those clients who use the Internet have

been online ....................................................................................... 87

LIST OF TABLES

xii

Table 4.16 Analysis of client responses with regard to the responsibilities for

developing and maintaining the client’s Internet site or advertising

activities ........................................................................................... 89

Table 4.17 Analysis of client perceptions of Internet value............................... 90

Table 4.18 Analysis of client understanding of their agency’s perception of

the value of the Internet.................................................................... 91

Table 4.19 Does the agency provide Internet advertising services cross-tabulated

with whether the client uses the Internet to promote/sell your

products/services .............................................................................. 93

Table 4.20 Reliability analysis of the five SERVQUAL components…………95

Table 4.21 Independent Samples t-tests – Equal variances assumed Modified

SERVQUAL components ................................................................ 96

Table 4.22 Reporting of group means................................................................ 96

Table 4.23 Independent Samples t-tests – Equal variances assumed Individual

Empathy Component question items ............................................... 97

Table 4.24 Reporting of group means................................................................ 98

Table 4.25 ANOVA of client / agency expectations.......................................... 99

Table 4.26 t-tests results on Questions 12 and 24, significant at <0.1 level

Independent Samples Test - Equal variances assumed.................. 100

Table 4.27 Summary of agency / client paired groups for analysis ................. 102

Table 4.28 Agency perceptions of whether the Internet ‘adds value’

cross-tabulated with client perceptions of whether the Internet

‘adds value’ .................................................................................... 104

Table 4.29 A Comparison of client's Internet experience and Internet

advertising service expectations..................................................... 105

Table 4.30 Relationship between interactivity and clients' sales achievement 106

Table 4.31 Relationship between interactivity and clients' sales achievement 107

LIST OF FIGURES

xiii

LIST OF FIGURES

Figure 2.1 Traditional mass media model of one-to-many marketing

communication.............................................................................. 13

Figure 2.2 The new model of marketing communication for the web ........... 14

Figure 2.3 Conceptual Model of Service Quality........................................... 45

Figure 4.1 Analysis of industries agencies feel most suitable for Internet

advertising ..................................................................................... 78

Figure 4.2 Agency responses relative to the specific Internet services the

agency provides............................................................................. 80

Figure 4.3 Analysis of the forms of the Internet utilised by

client companies............................................................................ 88

Chapter One INTRODUCTION

1

Chapter One: INTRODUCTION

“Advertising research is one-half frustration, one-half exclamation

point, and one-half question-mark. If this adds up to more than 100

percent, it proves that mathematics and research sometimes gives

confusing results.”

(Michael Ryan cited in Baker 1968, p. 144)

1.0 Introduction

The advertising industry has evolved significantly over the past few decades,

moulding its structure, service offerings and size to complement client needs.

New industry competitors, including: creative design houses (packaging and

artwork), public relations, sales promotion and market research specialists, direct

mail houses, relationship marketers, telemarketers and Internet specialists are all

hedging agency profits. The entrance (and often departure) of these new

competitors in the marketplace has been the result of client demand and clients’

‘unbundling’ their operations. Agencies are now being forced to consider

broadening their service offerings to clients. Apart from widening their service

offerings, advertising agencies are being driven to invest in building and

sustaining valuable client relationships to establish client loyalty, with profit and a

healthy bottom-line being the ultimate objectives.

The evolution of the Internet has provided a new communication tool for people

all over the world to access a vast amount of data and resources from any

geographical location. The Internet has experienced widespread adoption. In

Australia, the Australian Bureau of Statistics reports (2001) that the Internet user

population is currently 14.3 million users (ABS, 2002, p.28). In fact marketing

researchers suggest that the Internet has gone “mainstream” and that for the most

part, the online world mirrors the offline world (Hoffman and Novak, 1996). This

is because more and more people bring to the Internet the activities and interests

that preoccupied them before they accessed Internet services. This consumer

behaviour presents interesting opportunities for businesses and other stakeholders

in the advertising industry. Around the globe clients are actively getting online,


2

some using this new communication channel simply to put their product or service

brochure online, while others are creating integrated marketing campaigns

combining both online and offline media channels. At the end of 2000, Australian

Internet advertising spend was estimated at $100 million (Aldred, 2000). In

response to these significant changes, agencies are being challenged to assess their

current service offering and up-skill, in order to provide clients with an interactive

service offering. Advertising agencies will need to decide whether the provision

of Internet advertising services to their client base, will be essential to their

survival, in order to remain economically viable and continue to effectively and

efficiently promote their clients' products, services or ideas.

1.1 Background and Research Questions

The adoption and provision of Internet services is of important concern to the

advertising agency. Advertising agencies need to understand how the promotion

of a client’s product, service or idea through an online advertising channel will

affect the agency’s service structure and the agency-client relationship.

Responding to these changes will be vital to an agency’s long-term success. Since

maintaining a healthy and solid relationship with the agency’s clients is one of the

most important goals of the advertising agency, it is important to measure both the

agency and client expectations of the value of the Internet as a promotional tool. If

gaps between client and agency perceptions of the value of the Internet exist, such

gaps could effect and endanger the agency-client relationship, which ultimately

could lead to the loss of client accounts.

Several research studies have been conducted on the use of the Internet and World

Wide Web (WWW) over the past decade. This earlier research primarily focused

on profiling Internet users, as well as the number of hosts and users online, and

more recently on research and measurement issues relative to Internet use

(Harvey, 1997). Only limited research to date has been undertaken to examine the

implementation and the implications of incorporating the Internet into marketing

and advertising strategies. In the marketing domain Donna Hoffman and Thomas


3

Novak’s work, published in the Journal of Marketing in 1996 is an exception. In

the advertising field, the research commenced by Alan and Victoria Bush and

Sharon Harris (1998) published in the Journal of Advertising Research is another

exception. Their research examined advertiser perceptions of the Internet as a

marketing communication tool in order to assist companies in gaining a better

understanding of this new medium. Bush and Bush (2000) later expanded on this

research into advertisers’ perceptions of the Internet, to further investigate

whether the inclusion of the Internet in the marketing communications mix would

affect the agency-client relationship. The research purpose of this study is to take

Bush and Bush’s (2000) research findings one step further and assess whether

there are ‘gaps’ that exist between the advertising agency’s expectations and their

client’s expectations of the Internet’s value as a promotional tool. ‘Gaps’ are

perceptual differences that could arise between the agency and the client. It is

important to study these gaps because perceptual differences could lead to tension

in the agency-client relationship, client dissatisfaction and loss of client accounts

and agency profit.

Whilst considerable B2C (business-to-consumer) research has been undertaken to

examine changing relationships in marketing, only limited research to date has

focused on explaining how the Internet will change relationships in business-to-

business (B2B) transactions. B2B marketers however, can learn from the extant

literature on B2C exchanges on the Internet, because much of marketing practice

is based on common principles. The B2C literatures has been reviewed and

applied to this study in order to respond to the broad research question that will be

addressed in this thesis, that is: “How will the introduction of the Internet as a

promotional tool impact agency-client relationships?” The scope of this study is

therefore focused on the use of the Internet as a promotional tool in the B2B

environment and examines how perceptions of Internet value impact service

expectations within the agency-client relationship.

The focus of this study is on the use of the Internet in the advertising industry and

examines if Internet-based advertising experiences are influencing client


4

expectations of the service role currently offered by an advertising agency. This is

important research because new technology, such as the Internet, will influence

how advertising agencies maintain the right agency-client chemistry to build

client loyalty. More importantly, a lack of clear understanding between agency

and client functions and roles could result in tension in the agency-client

relationship, which could affect the success of long term, sustainable and

profitable relationships between these two parties.

The evolution of new technology and the Internet has introduced interactive

advertising and new opportunities for integrated marketing communication (IMC)

into the agency-client relationship. Traditional advertising agencies are being

forced to adopt interactive marketing strategies in order to fulfil their clients’

online marketing needs. With the adoption and use of interactive technology

within the advertising industry this study investigates the first research question:

“What are the differences between agency and client perceptions of the value of

the Internet as a promotional tool?” To examine these differences the first

hypothesis tests whether there would be a significant difference between client

and agency perceptions of the value of the Internet as a promotional tool, H1

states:

There will be a significant difference between client and agency perceptions

of the value of the Internet as a promotional tool.

To ensure client satisfaction and maintenance of a healthy agency-client

relationship, it is vital to observe whether gaps between agency and client Internet

advertising service expectations exist. Parasuraman, Zeithamal and Berry’s (1988)

SERVQUAL model, measuring expectations of service quality is adapted for this

study to examine the second research question: “What are the differences between

agency and client expectations of the value of the Internet as a promotional

tool?” In order to ascertain further differences between agencies and their clients’

expectations. The inquiry was refined to examine whether Internet experience and

use of interactive media (i.e. WWW, email, newsgroups, etc.) influences clients’


5

expectations. The second hypothesis tests whether clients’ Internet experiences

influence their service expectation. H2 states:

The greater a client’s Internet experience, the greater will be their service

expectation of Internet advertising.

1.2 Research Design

The Internet is not restrained by boundaries. Therefore the research undertaken in

this study sought to engage an international advertising agency network to

respond to the study inquiry. This research was guided by a positivist

epistemology and employed survey method to collect responses from a dispersed

international network of advertising agencies and their clients. The survey tool

developed gathered both quantitative and qualitative data. A web-based survey

approach was selected for this study due to four key advantages including:

1) sending the questionnaires via email allowed respondents to receive and

answer the questionnaire, without any time restrictions and at a time most

convenient to them (Assael, 1993);

2) the web-based questionnaire and online database allowed the researcher to

gain a large amount of information with a small amount of difficulty;

3) using a web-based survey approach lowered the chance of respondent bias,

due to the lack of interaction with an interviewer or other survey respondents

(Assael, 1993); and

4) finally, the submission of questionnaires via email and Internet access was an

inexpensive method of data collection.

A two stage survey method was implemented using a non-probability sampling

procedure. Stage one involved a web-based questionnaire being sent to a sample

of advertising agencies within the international agency network. Administering a

snowball sampling strategy, a client survey was submitted to a selection of clients

related to all agencies who responded to the agency questionnaire. The

questionnaires collected information relating to Internet service expectations,


6

Internet usage and value perceptions, general agency and client characteristics and

overall perceptions of the value of the Internet as a promotional tool.

1.3 Thesis Outline

This thesis comprises five chapters. Chapter One introduces the background and

the research questions and hypotheses formulated for this study are outlined. An

overview of the research design, positivist approach and web-based survey tool

are discussed. Finally an overview of the thesis content is provided.

Chapter Two provides a detailed review of the research literature. Firstly,

literature relating to B2B marketing is addressed with an outline of how B2C

research can be applied to B2B relationships for the purposes of this study. The

adoption of the Internet as a promotional tool is investigated, detailing the role of

IMC (integrated marketing communications) and interactivity in relationships.

The third area of focus within the literature review is the advertising industry. The

typical agency services provided, the types and styles of agencies and agency-

client relationships are reviewed. How the Internet will affect the agency-client

relationship and implications of the Internet on such relationships are discussed.

Chapter Two concludes with an overview of value adding and perceptions of

Internet value.

Chapter Three describes the methodological approach undertaken for this research

study. The selection of a positivist epistemology and application of survey

research is discussed, before introducing the research design. Qualitative and

quantitative data gathering approaches are outlined along with the survey

sampling and procedure. The rationale for the web-based survey research method

is reported, before reviewing the survey administration process. The structure and

content of the questionnaires and adaptation of the SERVQUAL questions is

provided, before concluding this chapter with a review of the ethical

considerations and methodological limitations identified for this research study.


7

Chapter Four provides an analysis of the data collected from this research study.

Firstly, descriptive statistics including the sample population and sample

description are outlined. Agency and client frequencies including the use of the

Internet and value perceptions are reported. Bivariate analysis into the provision

and use of the Internet as a promotional tool is conducted. A discussion of the

factor analyses run to test the multi-dimensional structure of SERVQUAL is

provided. The chapter concludes with a discussion of the qualitative data collected

from the survey, which has been used to confirm and elaborate the quantitative

findings interpreted from the empirical data collected.

Chapter Five discusses the findings in response to the research questions and

hypotheses. The implications of the research findings for advertising theory and

practice and B2B research are discussed. These are situated in a discussion of the

current advertising and marketing literatures. The limitations of the research are

also addressed in this chapter and the thesis concludes with recommendations for

future research in the advertising discipline.

1.4 Summary

This chapter has introduced the research topic, outlined the background and

explained the research questions and hypotheses formulated for this study. The

research design and thesis outline have also been provided. The following Chapter

Two now turns to a detailed review of four major literatures: B2B marketing,

Internet marketing, advertising industry and agency background information and

services marketing literature. The synthesis of these literatures establishes the

groundwork for the research investigation undertaken in this study of the

advertising industry.

Chapter Two LITERATURE REVIEW

8

Chapter Two: LITERATURE REVIEW

“It is insight into human nature that is the key to the communicator’s

skill. For whereas the writer is concerned with what he puts into his

writings, the communicator is concerned with what the reader gets

out of it. He therefore becomes a student of how people read or

listen.”

(Bill Bernbach cited in Richards 1996, p. 10)

2.0 Introduction

Widespread adoption of the Internet has the potential to change agency-client

relationships in the advertising industry. Whilst considerable research has been

directed at examining the changing relationships between businesses and

consumers (B2C), only limited research to date has focused on explaining how the

Internet will change relationships in Business-to-Business (B2B) transactions.

This lack of B2B research raises important and previously unexplored questions,

specifically within the advertising industry. This study aims to respond to this

broad research inquiry by asking the question: “How will the introduction of the

Internet as a promotional tool impact agency-client relationships?” This study thus

focuses on the use of the Internet in the advertising industry and examines if the

growth of the Internet is influencing client expectations of the service role

currently offered by an advertising agency. This is important research because

new technology, such as the Internet, will influence how advertising agencies

maintain the right agency-client chemistry to build client loyalty in order to hold

onto clients for a sustained period of time. More importantly, a lack of clear

understanding between agency and client functions and roles could result in

tension in the agency-client relationship, which could affect the success of long

term, sustainable and profitable relationships between these two parties.

This chapter reviews marketing literature relevant to exploring the influence of the

Internet on B2B relationships in the advertising industry. The scope of this study

is focused on the use of the Internet as a promotional tool in the B2B environment

and examines how perceptions of Internet value impact service expectations, as


9

opposed to service expectations in the business to consumer environment. To

respond to the research inquiry undertaken in this study, four major literatures

were reviewed. These included B2B marketing, Internet marketing, advertising

industry and agency background information and services marketing literature.

This chapter proceeds firstly with a brief review of the B2B literature, which sets

the context for a detailed discussion about the Internet as a promotional tool in

advertising strategy. Next, literature that describes the advertising industry is

presented and scholars’ arguments concerning how the Internet has affected the

advertising agency’s traditional services and structure are summarised. This

discussion provides a detailed understanding of how the various kinds of

advertising agencies will need to adopt the Internet as a promotional tool in their

typical service offering, in order to remain viable in today’s competitive

marketplace. Finally, the chapter concludes with a detailed discussion of service

expectations and overviews Parasurman, Zeithamal and Berry’s (1988; 1994)

SERVQUAL model and research outlining service expectations.

2.1 Business-to-Business Marketing

While there is extant literature on consumer marketing processes and activities

involving the Internet, there is a lack of substantial research on B2B marketing

(Boyd and Spekman, 2001), especially in relation to advertising agency services

and client and agency relationships. The following section introduces relevant

B2B marketing terminology and then overviews scholarly work that discussed

how the Internet will affect B2B relationships. Concluding this overview is an

outline of how this B2B marketing literature has been applied to the agency-client

relationship, which is the focus of this study.

The differences between B2C and B2B marketing are well documented (Simkin,

2000). The contrast typically relates to:

• The structure of the buying unit. In B2B this includes the supply of goods,

services or information from one business to another (Dann and Dann,

2001);


10

• The market dynamics and level of demand. In B2B relationships the

purchase of goods or services are not for personal consumption, but for the

purpose of making a profit (Lamb, Hair and McDaniel, 1992) through to

production of a further product, service or idea which is on-sold in the

marketplace; and

• B2B sales traditionally achieve higher volumes than B2C products

(Assael, 1993). The decision-making styles and process between a B2C

and B2B product are therefore considerably different.

Of more interest to this study is the fact that B2B marketing involves the

establishment and maintenance of a ‘partnership’ between the selling and the

buying organisations (Ford, Gadde, Hakansson and Snehota, 2003). In the B2B

environment relationships tend to be long term. Consequently, successful B2B

relationships are based on more regular, constructive and innovative interaction

than in consumer marketing (Kong and Mayo, 1993).

In the advertising industry, agencies provide B2B marketing services to their

clients, including strategy, planning, promotion and execution of advertising

campaigns, as well as in-depth customer research and testing, marketing staff and

support services, and through-the-line management. All of these B2B related

services are undertaken in order to assist in the promotion of the client’s product,

service or idea to their target market. Only nominal research to date has been

conducted to examine the influence of the Internet on B2B relationships. The

research undertaken in this study attempts to bridge this gap in marketing and

advertising literature.

Dann and Dann (2001) point out that the Internet has a valuable role to play in the

development of B2B relationships. They argue that the Internet facilitates and

improves efficiency and assists in the provision of better service, through the use

of integrated transactions. Boyd and Spekman (2001) have studied the Internet’s

ability to drive value creation in B2B relationships and report that B2B exchanges

will be dynamic and Internet usage will need to adapt as the B2B relationship


11

changes over time. Apart from Boyd and Spekman’s (2001) study there has not

been a detailed investigation to date regarding the value of the Internet in B2B

relationships. However, B2B marketers can learn from the extant literature on

B2C exchanges on the Internet. This is because much of marketing practice is

based on common principles (i.e. marketing exchange relationships). Based on

this assumption, the following section aims to highlight relevant marketing

information from the B2C literature that has overviewed the influence of the

Internet on marketing exchanges, specifically in relation to promotion and

advertising strategies.

2.2 Adoption of the Internet as a Promotional Tool

The Internet is a relatively new communication tool that provides people with

access to information from anywhere in the world, through a computer, modem

and keyboard or mouse. Commonly referred to as the ‘net’, the Internet is a

worldwide network of computers and users (Shiva, 1997), which supports a

collection of information resources (Hoffman, Novak and Chatterjee, 1997) that

can be obtained with ease. Hoffman et al. (1997) suggest that the introduction of

the Internet has led to the creation of a global online marketplace. Other scholars

have pointed to the introduction of the Internet as a driver in establishing

electronic commerce (Kambil, 1995) and electronic trade (e-trade).Ultimately, the

evolution of the Internet as a global communication infrastructure (Cae, 2000) has

created a new advertising channel for advertisers and advertising agencies to

utilise and will provide advertisers with the means to more cost effectively target

their promotional messages to consumers.

As a new advertising channel the Internet and particularly the World Wide Web

(WWW) portion of the Internet, are challenging traditional forms of mass media

advertising (Hoffman and Novak, 1996; Hearn, Mandeville and Anthony, 1998).

Meeker (1998) defines a mass communication medium as the communication

from “one person or group of persons through a transmitting device (a medium)

to a large audience or market”. The Internet offers an interactive alternative to


12

mass media communication through the use of web pages, discussion groups and

email (Hoffman and Novak, 1996).

A significant advantage for advertisers will be the opportunity to communicate

more directly with individual consumers through this medium. Marketers will also

be able to promote their products and services in a personalised, targeted manner

to interested people within their target market. Importantly, wastage of advertising

and marketing funds often experienced when exposing promotional messages to

the mass market, may be reduced as a result of using this new interactive medium.

Advertisers will need to re-address their techniques, services and agency structure

and evolve new communication strategies for the Internet as market share is being

lost to this more personalised, interactive form of Internet advertising. The

following section now turns to a detailed discussion describing the influence of

the Internet on the advertising message and its role in integrated marketing

communication (IMC).

2.2.1 Integrated Marketing Communication

The Internet has contributed to a greater adoption of integrated marketing

communication (IMC) strategies, by allowing marketers to communicate more

directly with individual consumers (Low, 2000). Internet functions become

integrated into a company’s communications mix, which permits the operation of

the Internet as an advertising medium to be incorporated alongside more

traditional media types. The application of the IMC concept involves the

progression away from the traditional one-to-many marketing communication

model for mass media (as illustrated in Figure 2.1) to the one-to-one

communication, or many-to-many communication model (as illustrated in Figure

2.2) (Hoffman and Novak, 1996).


13

F = firms C = market of consumers

Figure 2.1: Traditional mass media model of one-to-many marketing communication

(Hoffman and Novak, 1996, p.52)

The inclusion of the Internet in the promotional mix will not eliminate the use of

mass media advertising channels such as television, radio, newspapers and

magazines. However, the Internet may reduce the amount of mass media

advertising required. Arguably, this will occur because the personal computer

with Internet access is being utilised frequently by target audience members as an

effective communication channel to make both social exchanges using email and

commercial exchanges to purchase products on the web. The advertising industry

is being challenged to create more direct, personal and interactive communication

with the target market through the use of the Internet.

halla

This figure is not available online. Please consult the hardcopy thesis available from the QUT Library


14

F = firms C = market of consumers

Figure 2.2 The new model of marketing communication for the web

(Hoffman and Novak, 1996, p.53)

2.2.2 Interactivity in Relationships

The influence of the Internet on business-to-consumer (B2C) relationships has

introduced a new dimension of interactivity to the communication industry

(Shiva, 1997). Along with the introduction of the Internet, advertising as a form of

communication has become more interactive. There are three key features

identified in relation to interactivity in relationships. First, traditionally

advertising has involved the reduction of information about a product, service or

idea’s core benefits into a 30 second TVC, a full page colour magazine

advertisement, or a 15 second radio spot, in order to persuade the target market to

take action (Shiva, 1997). However, while traditional advertising involves the

reduction of information, the Internet enables the advertiser to provide consumers

halla



15

with detailed information with no time or space restrictions. Internet-based

advertisers do not need to rely on traditional media channels, and are becoming

liberated from these limitations, thus taking advantage of interactive

communication and informing and educating consumers online.

Second, as Shiva (1997) suggests advertising agencies and marketers need to

combine both ‘infotainment’ and ‘edutainment’ into their online promotional

offerings in order to entice the new online audience and sell their products,

services or ideas through new, Internet-based channels. ‘Infotainment’ is the

provision of information in an entertaining format; and ‘edutainment’ is the

process whereby consumers are educated about a product, service or idea in an

entertaining way (Shiva, 1997). However, what is potentially more persuasive is

that Internet communication more closely resembles ‘real communication’. This is

because interactive communication is:

1. bi-directional: in that it facilitates Internet users’ exchange of

information and ideas; and

2. personalised: in that it connects the message sender and receiver via

interactive communication, and provides the consumer with increased

control over acceptance (or rejection) of a message (Hoffman and Novak,

1996; Shiva, 1997).

And finally, Berthon, Pitt and Watson (1996, p. 53) argue that the WWW

represents a “remarkable new opportunity for advertisers and marketers to

communicate with new and existing markets in a very integrated way.” This is

because the Internet, and in particular the WWW, frees consumers from their

traditional ‘passive’ roles as receivers of marketing communication and gives

them greater control over their information search and acquisition process. As a

result, consumers are now becoming interactive and more active participants in

advertising and marketing processes (Hoffman and Novak, 1996; Hoffman,

Novak and Chatterjee, 1997). This section has summarised the marketing

literature which explains the role of marketing and advertising in B2C interactive

exchanges. This summary has revealed that the Internet is creating interesting and


16

new styles of exchange relationships, specifically in communication exchanges.

The following section now turns to a discussion of the advertising industry and

agency background and integrates the literature from the B2C marketing literature

with B2B environment issues.

2.3 The Advertising Industry

“The relationship between a manufacturer and his advertising agency

is almost as intimate as the relationship between a patient and his

doctor. Make sure that you can live happily with your prospective

client before you accept his account.”

(David Ogilvy cited in Richards 1996, p. 6)

The majority of national advertisers use advertising agencies to design, produce

and place their advertising activities (Oliver, 1976). Bovée and Arens (1982, p.

115) define the ‘advertising agency’ as the:

“independent organisation of creative and business people who specialise

in the development and preparation of advertising plans, advertisements,

and other promotional tools”.

The conception of the advertising agency developed from early advertising agents

who sold space in newspapers (Hart, 1990; Oliver, 1976). These agents later

realised that it was easier to sell newspaper space if they could show the advertiser

how the space could be filled. Such advertising agents then expanded their role to

offer design and copywriting skills, leading the way for the structure and service

offerings that make up today’s traditional advertising agency.

According to Hart (1990) the first advertising agency, William Taylor, was

founded in 1786. While Aaker, Batra and Myers, (1992) state that the first

advertising agent, Volney B. Palmer, began operating in Philadelphia in 1841.

Like the first advertising agents known, Palmer was also essentially an agent of

newspapers, and although the industry, along with the advertising agency

structure (Oliver, 1976), has changed greatly since his time, the system of a fixed


17

commission method of compensation is still used by most of today’s advertising

agencies (Aaker et al., 1992).

The function of the advertising agency has traditionally been described as the

creation and design of advertisements that provide a client’s product, service, or

idea with exposure to the target market or audience (Oliver, 1976). Following this

process is the function to promote it favourably, show its benefits and persuade

the consumer to buy the client’s offering. Additionally the agency acts on behalf

of the client (or advertiser) in the purchase of media space (Bovée and Arens,

1982; Oliver, 1976). To achieve the client’s ultimate aim, of a purchase being

made or the acceptance of an idea, the advertiser’s communication needs to satisfy

several functions in order to attract the target markets’ attention and persuade

them to make a purchase, or adopt an idea. Advertising agencies use various

models and strategies to assess the effectiveness of their creative and media

product prior to presenting to their clients and prior to a campaign being launched

in the market. The following section introduces the ROI model designed by the

international advertising agency group involved in this study and the application

of how this ROI model can be applied to the Internet is explored. This ROI model

is used as a tool to evaluate the agency’s creative and media products prior to

presentation to clients and to ensure the effectiveness of a campaign

The international advertising agency group around which this research study is

based uses a strategy called ROI: Relevance, Originality and Impact, to measure

campaign effectiveness. The ROI strategy involves the creative and account

management teams evaluating their creative and media products before

presentation to the client, by using the following specific criteria:

• they look for relevance of the idea and execution (R);

• originality of the strategy (O); and

• impact (I).

ROI has been used by advertising agencies for traditional broadcast media and

press. However, the ROI strategy could be applied effectively to Internet


18

campaigns. An example of the application of the ROI strategy to the Internet

could be as follows: A web page or banner advertisement needs to persuade the

viewer to enter the advertiser's website. In order the gain click-through the web

page or banner advertisement must have some relevance (R) to the viewer’s

needs, wants or interests. The first point of contact needs to be attention-grabbing

or provide some value of entertainment or information appeal, which will

encourage the viewer to click on the banner ad or click through and surf around

the website. Because of the millions of online advertisers and websites active in

the Internet today, the advertiser’s content needs to provide some originality (O) –

otherwise viewers will simply click out of the banner ad or website. To gain the

ultimate result of a purchase being made or the acceptance of an idea, the

advertiser’s content needs to be impactful (I), thus driving the viewer to make

online enquiries or purchases or adopt the advertiser’s message and take action in

the desired way.

ROI strategy will directly impact on the competitive strength and sustainability of

the advertising agency network involved in this study. It goes without saying that

the advertising industry is fiercely competitive. In line with Internet adoption and

user growth, Internet advertising revenue in Australia has been experiencing

amazing growth. At the end of 2000, Australian Internet advertising spend was

estimated at $100 million and it was reported that as many as ten advertisers had

been spending in excess of $100,000 a month and more than 70 advertisers

spending up to $20,000 a month on their online advertising (Aldred, 2000). With

the banking and financial services, retail, classifieds, technology and media

comprising the major advertising categories driving online advertising spend. The

evolution of the Internet as a promotional tool offers advertising agencies a new

revenue stream. Yet industry pundits question if agencies should invest the time

and finances to set up Internet advertising services, and market these new services

to their existing and potential client base. The following section provides a further

understanding of the advertising agency by outlining the service provisions of

agencies, the trend towards unbundling of services, and the traditional and

specialist agency models.


19

2.3.1 Agency Service Provisions

Traditionally advertising agencies have provided a wide array of services to their

clients. A complete package, including basic advertising creation and booking

services, and incorporating account management, creative, media and production

services. If a client required product packaging to be designed, a television

commercial produced, or a direct mail letter written and mailed out to a selection

of their target audience, the traditional advertising agency would provide all of

these facilities to fulfil the client’s needs. In any case where the advertising

agency did not possess particular services in-house, the agency would liaise with

external service suppliers on behalf of the client. Over time the traditional duties

performed by the advertising agency on behalf of the client have changed

dramatically, to also include other services such as in-house market research,

public relations and sales promotion activities. Changes in the industry over the

last decade have led to a trend for clients to ‘unbundle’ their marketing activities.

The ‘unbundling’ of clients’ operations and outsourcing of their functions over the

last decade has been the result of clients’ attempts to reduce overheads. Many

companies today have tried, or are attempting ‘unbundling’ with mixed results. In

the advertising industry, ‘unbundling’ refers to the splitting up of a client’s

advertising account between several agencies, or involves the client working with

various individual specialists such as for their creative, media buying, Internet

design, market research and telemarketing functions. As a result of clients

‘unbundling’ their operations, advertising agencies have lost significant revenue

streams by not providing the services that were once the agency’s primary

responsibility and major income generator.

One of the advantages of ‘unbundling’ from a client’s perspective is that the

strategy allows the client to have more direct control and contact with each service

provider. Another advantage clients perceive from ‘unbundling’ is cost

efficiencies. With lower costs due to the elimination of service fees, gained

through services solicited via the advertising agency on behalf of the client. On

the other hand however is the argument for ‘bundling’ of service functions within


20

the advertising agency. The primary argument for ‘bundling’ is that it provides

uniformity between communication and ease of negotiations. Working with just

one advertising agency instead of three or four different agencies would prove

more time and resource efficient for the client and thus could assist in maintaining

a healthy agency-client relationship.

Consumers’ adoption of the Internet, combined with increasing industry interest

in interactive communication, raises additional questions about how to incorporate

new Internet services into the agency-client relationship. However, before these

decisions are made advertising agencies will need to fully understand which of

their clients are actively using the Internet as a promotional tool. Agencies will

also need to consider whether they should ‘bundle’ their services and add Internet

advertising functions to their existing service base, in order to fulfil their clients'

changing advertising requirements. An outline of the changes in the advertising

industry between traditional and specialist advertising agencies and the dilemma

over bundling Internet services into the agency service offering is discussed in the

following section.

The typical service functions of the advertising agency have moved in constant

flux, which reflects corporate interests and the surrounding business and

marketing economy. For example, since the 1840's and Volney Palmer's first

agency, specialists satisfying particular client needs have entered the market and

promoted their services direct to the agency's client base. These new competitors

to the traditional advertising agency have been able to provide the advantage of

specialised services at more competitive and cost effective prices than the

traditional advertising agency. As a result, some advertising agencies have started

to lose certain service functions to specialist service providers. Frequently many

agencies are being thankful that they could move back to a specialist focus on

broadcast media and print advertising.

With the increasing growth of the Internet as a communication medium, numerous

Internet Service Providers (ISP’s) and website boutiques (designers) have also set


21

up operations and begun to promote Internet-based services directly to clients;

effectively attempting to cut the advertising agency out of the process. Website

boutiques have set up business to provide design, technical, maintenance and

measurement of the effectiveness of websites for their advertisers. Essentially

these boutiques are specialists in website design and Internet advertising. Over the

past few decades, these new service providers have become serious competition

for traditional advertising agencies, with the potential to threaten the agency-client

relationship (Bush and Bush, 2000). New industry competitors have included

creative design houses (packaging and artwork), public relations, sales promotion

and market research specialists; direct mail houses, relationship marketers,

telemarketers and more recently website design specialists. When a new

marketing or promotional innovation like telemarketing entered the business

marketplace, clients were eager to adopt the new trend and agencies were keen to

provide the new service. Sometimes advertising agencies would work in

partnership with external service providers on behalf of the client, or otherwise

the client would act directly with the new service provider keeping the agency

contact separate. The entrance (and often departure) of these new competitors into

the marketplace has been as a result of client demand and is forcing agencies to

consider broadening their service offerings to include all aspects of

communication (Kassaye, 1997). Although advertising agencies to date may not

have lost substantial revenues to these new competitors the future threat is serious,

especially with the adoption and use of the Internet as a promotional tool

(Kassaye, 1997).

In order to offer clients more value added services, advertising agencies

throughout history have attempted to diversify into other fields. Over time the

industry has seen the introduction of market research, direct marketing,

telemarketing and most recently strategic planning services in the agency offering.

Many of these service diversifications have been successful and as a result

become permanently incorporated into the agency’s standard service offering.

While these services have been adopted by advertising agencies, other services

have been less successful, being more a fashion or fad in the industry. Advertising


22

agencies are now faced with the following important questions: Is the Internet

simply fashionable with consumers at the moment? Or is the Internet a fad?

Agency decision-makers are facing the dilemma of whether to add Internet

advertising services to their portfolio. On the other hand however, agency’s can

decide whether to allow website boutiques to enter the industry uncontested,

which would enable the agencies to remain solely focused on the traditional role

of advertising, utilising traditional above-the-line media (i.e. television, radio,

print and press). To better understand how the inclusion (or not) of Internet

advertising services in the agency service offering will influence the agency-client

relationship, it is necessary to review the types and styles of advertising agencies

in operation, this is briefly addressed in the following section.

2.3.2 The Types and Styles of the Advertising Agency

The typical size and layout of the advertising agency has changed greatly since the

birth of advertising agencies and differs across cultures and throughout various

business communities. Advertising agencies vary in size and structure from small

focused boutique shops to full service marketing organisations. Within these

agency structures common services prevail, including creative development,

production, brand strategy, media planning and buying and promotion planning

(Devinney and Dowling, 1997). This literature review focuses on three common

forms of advertising agencies that exist today: the boutique agency, the specialist

agency, and the full service advertising agency. All three agency types are often in

direct competition with each other for the clients’ marketing dollar. The following

section briefly discusses the distinguishing features of each agency type, starting

with the boutique agency, then reviewing the specialist agency, and concluding

with the full service advertising agency.

The boutique advertising agency is generally a smaller advertising agency, which

often has limited account service people, with little or no marketing or sales

direction, and a greater focus on creative product (Bovée and Arens, 1982; Aaker

et al., 1992) to meet specific client needs. Boutique agencies are usually referred

to as ‘creative boutiques’ or ‘creative shops’, whereby the finished product is


23

produced for execution in a variety of media. Often in a boutique agency, as

opposed to a full service agency, you might find the creative writer/art director

also performs the account management role, whereas in a larger full service

advertising agency specialist personnel usually perform the role of account

management.

The specialist agency is one that provides specialised services focused on a niche

market or area of advertising. Specialist agencies satisfy a particular

communication element such as graphic design, direct marketing, telemarketing,

advertising research, media buying and website design. These specialist agencies

differ greatly from full service advertising agencies in their structure and the

services they provide to their clients, and can be considered like full service

advertising agencies solely focused on one communication area. Specialist

agencies may often work in conjunction with the client’s full service advertising

agency.

The traditional full service advertising agency has most commonly been referred

to in the past as the ‘full service agency’ (Aaker et al., 1992). This agency type

provides clients with a wide spectrum of basic advertising and non-advertising

services (Bovée and Arens, 1982) including new product introduction plans,

market research, creative and media services, account management, and

production and financial services. The majority of full service agencies are larger

in staffing size than boutique and specialist agencies. The traditional full service

advertising agency is now evolving into a full service communication agency,

taking the full service agency one step further providing a wider array of

communication functions aside from traditional advertising services. The structure

of the full service communication agency includes all of the traditional roles of the

full service advertising agency (such as basic client, media and creative services)

as well as providing in-house public relations, sales promotion, market research,

relationship marketing, telemarketing and Internet advertising services. The full

service communication agency is an agency that provides all of these additional

services and any newly developed specialist services in-house. This new form of


24

advertising agency is emerging through the acquisition of competitor specialist

agencies by larger, more financially stable agencies, focused on widening their

service offerings to their client base and providing the client with added value.

Full service communication agencies are assuming greater communication

responsibility and are expanding their advertising expertise to the benefit of their

clients.

Table 2.1 Overview of three most common agency types

Boutique Specialist Full service

• Tends to be smaller agency

size

• Specialised services to a niche market /

area of advertising

• Wide spectrum of basic

advertising and non advertising

services

• Common to have combined

staff roles –eg. Creative writer

/ Art Director also fulfils

Account Service role

• Graphic design house

• Direct marketing company

• Telemarketing services

• Advertising research

• Media buying

• Website design

• New product introduction plans

• Market research

• Creative and media services

• Account management

• Production

• Financial services

• Creative product focused • Like full service agencies focused on

one communication area

• Tend to be larger in staffing size

than boutique agencies

• Usually little or no marketing

or sales direction

• Often work in conjunction with a

client’s full service agency

• Now evolving into a full service

communication agency – by

providing some specialist services

in-house

Agency types and structures will impact the service offerings and influence

agency-client relationships. From the above theoretical discussion about Internet

communication and a practitioner perceptive of the advertising industry, the first

research question is derived:

What are the differences between agency and client perceptions of the

value of the Internet as a promotional tool?

The following section now focuses in more detail on the advertising agency-client

relationship. Arguably, the future of this relationship may be complicated by the

introduction of the Internet as a promotional tool. As highlighted in the preceding

section, Internet adoption in the advertising industry is blurring the roles and


25

functions traditionally performed by stakeholders. In response to these changes,

advertising agencies will need to better understand their clients’ wants and

requirements, as well as monitoring their partnerships to ensure productive

agency-client relationships are maintained.

2.3.3 Establishing Advertising Agency-Client Relationships

The role of the advertising agency is to assist the client to analyse the marketing

problem, recommend advertising solutions to improve the marketing process,

develop the creative approach to the most effective advertising campaign and then

use a series of external suppliers (from media owners to television production

houses) to bring a client’s campaigns to life (Hart, 1990). Of vital importance to

the success of the advertising agency in retaining a client's business, is the status

of the relationship between the agency and the client. Clients usually sign

contracts with an agency, sometimes these contracts are written in ink and other

times they are verbal or hand shake contracts that could be terminated at any time.

Establishing the right chemistry between the members of the agency and the client

is the single most important factor in running a successful advertising agency

(Hart, 1990; Wearne, 1985). There needs to be a mutual respect between the

agency and the client, otherwise the relationship could turn sour and result in the

agency losing the client account (Wearne, 1985).

From the recent published advertising literature, Kassaye (1997) points out that

the introduction of the Internet as a promotional tool is blurring the functions

performed by the agency and the client. He suggests that this blurring of functions

will threaten partnerships and add pressure to the agency–client relationship. This

may well result in serious challenges for advertising agencies. Ensuring the right

chemistry in the agency-client relationship will be paramount to overcoming the

blurring of functions introduced as a result of the Internet and to ensure an

advertising agency’s future success.

At the ‘heart’ of agency-client relationships is the advertising agency’s

understanding of their client’s wants and requirements. This foundational


26

understanding creates productive relationships on all levels and ensures both

parties can speak to each other in the same language. The existence of a close

relationship and understanding between the industry professionals from the client

side and the agency side, makes it a lot easier for agencies to identify occasions

when things might start to go wrong, thus providing the opportunity to prevent or

minimise potential negative situations (Hart, 1990). Clearly defining the client and

agency roles in the relationship will assist in developing and maintaining the right

chemistry between an agency and their clients.

No matter how good the creative or strategic product that comes out of the

agency, the relationship with one’s clients will determine the success of the

account and the agency’s long-term maintenance of that account. Developing a

sound relationship between the agency and the client relies on understanding

several factors. These include:

• who is responsible for the role of fulfilling company communications?

• does the agency have the responsibility and control over all promotional

pieces, press releases, advertising campaigns and media utilised?

• or to what degree does the agency have control over the advertiser’s

communications?

Answering these questions helps decipher the role and degree to which the agency

can submit and execute ideas on behalf of the client, in order to promote the

client’s product, service or idea to the target market and ensure that a healthy

agency-client chemistry is maintained. After ensuring an agency and their clients

have the right chemistry to work together in partnership, building the relationship

is the next step to ensuring a long and prosperous agency-client relationship.

It can take some clients up to two years to switch and develop a new viable

partnership with an advertising agency (Michell and Sanders, 1995). It is therefore

paramount that agencies build solid relationships with their new clients and

establish a good rapport in order to retain the client account year after year. An

advantage for the advertising agency in developing and maintaining long term

client relationships, was identified by Michell and Sanders (1995, p. 19), and


27

involves the fact that clients actually “gauge the benefits they gain from long term

relationships as outweighing problems posed by short term difficulties”.

2.3.4 Maintaining Advertising Agency-Client Relationships

Maintaining existing client accounts is of vital importance to the agency, as the

loss of a number of highly visible accounts over a short period of time can often

lead to a domino effect among other clients, which is difficult for an agency to

reverse (Na, Marshall and Son, 1999). A clear indication of an agency’s ability to

work with its clients can be revealed by the length of time the agency typically

retains its client accounts. This is an important factor, which potential clients

examine when they are looking for a new advertising agency.

The relationship between the agency and the client develops in stages (Jancic and

Zabkar, 1998) from pre-relationship phase to termination phase (Verbeke, 1988).

The beginning of the relationship commences with the pre-relationship phase,

during which both parties learn about each other. This phase then proceeds into

the developmental phase, whereby both parties usually begin to become more

comfortable in the relationship and the first advertising efforts or campaigns are

produced; yet both parties still have a lot of expectations about each other. The

developmental phase leads into the maintenance phase, during which more

successful campaigns are usually produced and a deeper relationship is formed.

The final stage of the agency-client relationship is the termination phase, where

both parties separate, either peacefully or abruptly (Verbeke, 1988). Even with the

introduction of the Internet as a promotional tool these stages of the agency-client

relationship and their associated challenges are still highly applicable.

Maintaining client loyalty can also assist in preventing the agency reaching the

termination phase of the relationship or in prolonging the life span of the agency–

client relationship. Michell and Sanders (1995) suggest that the length and

stability of agency–client relationships can be influenced by factors in the client’s

business environment. Such factors include change and uncertainty in the client’s

market; threats from new competition; changes in their product portfolio; and


28

even the client’s product or service life cycle could influence the agency’s

maintenance of an account. Michell and Sanders (1995, p. 10) proposed a model

for understanding inter-organisational loyalty in the agency–client relationship.

Their research conducted in the United Kingdom identified several factors which

influence client loyalty to the advertising agency. These include:

1) a stable business environment;

2) large organisational structures;

3) well defined general policies toward suppliers;

4) positive attitudes toward suppliers;

5) effective processes involving suppliers;

6) compatible interpersonal characteristics and;

7) actual account performance.

Michell and Sanders (1995) point out that agencies who find themselves differing

from clients on these important perceptual factors may discover that clients are in

‘agency-switch’ mode. While the reasons for the break-up of an agency–client

relationship tend to be very specific, the reasons for loyal relationships appear to

be more general (Michell and Sanders, 1995). Henke (1995) conducted a study to

identify key predictors of an agency switch. These predictors could provide an

efficient monitoring device for agencies to use with existing clients, and act as an

‘early warning system’, or be used with potential clients as an ‘opportunity

analysis’. Key findings from Henke’s (1995, p. 29-30) study highlighted several

selection criteria that client’s use when deciding to keep an agency, these include:

1) creative, which is crucial when winning new business;

2) length of current relationships, the role of creative diminishes as the

agency-client relationship evolves; and

3) providing a series of functions, agencies which can perform a changing

series of functions as the agency–client relationship evolves are likely to

be more successful in retaining client accounts.

Many account losses can be caused by agency mergers or acquisitions (Henke,

1995; Michell, Cataquet and Hague, 1992). Such losses may result in account


29

conflicts, or emerge as the result of new policies or changes in management on the

client side. However, a large proportion of account losses are attributed to client

dissatisfaction with agency performance (Henke, 1995; Na et al., 1999). While

changing advertising agencies involves major costs in terms of time and money,

there is a continuing trend for clients to change their advertising agencies (Michell

et al., 1992). This could be attributed to tensions placed on the agency–client

relationship resulting from changes in agency policy and or agency management.

Michell et al., (1992) states these types of changes influence client perceptions.

Typically leading them to think reduced levels of service are being provided.

Michell et al.’s (1992) research has identified a number of causes of

dissatisfaction in agency-client relations, which may lead to agency-client break-

ups. A major finding from their study was that in order to prevent account losses,

agencies need to be vigilant and alert and undertake regular performance audits to

identify any occurrences where tension between the agency and the client might

exist. It is recommended that agencies regularly undergo evaluations by their

clients, with the agency also evaluating the relationship they perceive exists

between their agency staff and the clients’ advertising or marketing teams. Client-

agency evaluations usually occur every 6-12 months and are executed in order to

overcome or prevent tension or possible conflicts in the agency-client

relationship. Client evaluations of agency services provides crucial strategic

information and offers an opportunity for agencies to pre-empt any negative shifts

in market share that will almost inevitably follow changing client (and potential

client) preferences (Na et al., 1999). Future agency-client relationships will be

further influenced by the adoption of the Internet, because it presents another

channel that advertising agencies need to review and report on, to ensure client

service satisfaction. Arguably effective monitoring and reporting systems in

relation to the performance of the Internet as a promotion tool will need to be

instituted in order to maintain the equilibrium in the agency-client relationship.

Satisfaction with the agency’s services and advertising performance is of great

concern to the client. Similarly, how the client perceives the agency’s


30

performance is of great concern to the agency. Obviously satisfaction with

performance on both sides of the relationship is required to develop and/or sustain

a solid, healthy agency-client relationship. Vital to the success of the advertising

agency is being able to measure their clients’ satisfaction of the agency’s services.

Furthermore, the introduction of the Internet as a new promotional tool presents

new challenges, which will impact the agency-client relationship. The following

section introduces the literature on service quality measurement as a suggested

approach to measuring the value perceptions in agency-client relationships. Firstly

however, a brief review of current literature outlining the influence of the Internet

on agency service provision is provided to contextualise the service quality

literature that follows.

2.4 Influence of the Internet on Advertising Agencies

“The work of an advertising agency is warmly and immediately

human. It deals with human needs, wants, dreams and hopes. Its

‘product’ cannot be turned out on an assembly line.”

(Leo Burnett cited in Richards, 1996, p. 38)

In order to provide Internet advertising services to an agency’s client base, the

roles of the agency may need to be extended or modified. The provision of

Internet services may impact all departments within the advertising agency.

Therefore the demands of providing Internet advertising services may require

agencies to re-structure themselves internally, as well as increase their technical

skill, knowledge, staff and facilities. Agencies may need to alter their traditional

shape and form, to become more modern communication agencies of the future,

and to be responsive to market demands for Internet application in advertising and

promotion.

The emergence and adoption of the Internet as a new communication medium will

effect all three agency types: the boutique agency, the specialist agency, and the

full service advertising agency (as outlined in Section 2.3.2). Boutique agencies or


31

creative shops will need to up-skill (hire qualified talent) and learn how to apply

their traditional creative skills to the online environment. Specialist agencies will

need to learn how to integrate their services with traditional and new media

agencies so that they are competitive in the changing industry. And finally, full

service advertising agencies will need to integrate the Internet into current service

and design models, thus evolving into full service communication agencies. No

matter what specific functions or structures these agencies possess, the Internet as

a new promotional tool will re-structure current agency types. Arguably however,

it will be the full service communication agency that will be the most difficult to

achieve. This is because the relatively new and unknown features of the Internet

will need to be integrated within the traditional agency service model.

If Internet advertising services are adopted and incorporated into the new full

service communication agency service offering, then in order to utilise the Internet

effectively, advertisers and marketers will need to clearly understand the

consumer Internet behaviour and market demand for Internet advertising and

promotion services. Similarly, advertising and marketing through traditional mass

media channels will need to change. For example, the agency will need to know

and understand who buys the advertiser's product or service, why they buy

(purchase motivation), the benefits they are searching for, and how the product or

service is better than its competitors (Bickerton, Bickerton and Pardesi, 1996).

Although the Internet is a new advertising medium, a clear marketing strategy

should be adopted and implemented for the Internet and this should fit within the

overall promotional plan for the client’s product, service or idea.

The Internet has evolved as a newer, faster medium that many companies already

utilise, and in most cases with very little active involvement from their advertising

agency (Charles, 1997; De Weaver, 1997). In fact, most advertising agencies fail

to include the Internet in their media recommendations to clients simply because

they lack expertise in the field (De Weaver, 1997). From the literature, several

reasons have been presented to explain why advertising agencies have not

incorporated Internet services in-house, these include:


32

• the agency is not sure how to begin implementing an Internet services

strategy;

• the agency is not convinced that it possesses the requisite skills to set up a

successful Internet division (Kassaye, 1997);

• there are very few documented Internet advertising case studies that

document the success or failure of Internet advertising. As a result, current

agency perception is that the Internet is high risk, because there is no

guaranteed financial returns to cover the initial set up costs (De Weaver,

1997); and

• limited attraction due to the small financial returns attainable, compared to

the initial set up costs of introducing Internet services (Charles, 1997).

The shape and form of the traditional advertising agency is changing as we move

into the 21st century. As a result, the future of the traditional full service

advertising agency appears bleak. With the adoption of the Internet, clients may

decide to work with other specialists or more qualified full service communication

providers who will fulfil all of their advertising, marketing and communication

functions under the one roof and often with better co-ordination and control.

Advertising agencies will need to decide whether the provision of Internet

advertising services to their client base, will be essential to their survival. Future

decision-making will also need to consider if these new services will be necessary

for agencies to remain economically viable and competitive in the advertising

industry. It has been projected that promotional methods and advertising messages

will need to be altered in order for agencies to encompass the Internet as a new

interactive communication channel. But those agencies who do not adopt the

Internet and begin to incorporate this new medium into their clients’ advertising

mix, will quickly be surpassed by more competitive agencies, or specialist service

providers (Kassaye, 1997).

To remain viable and competitive in this dynamic market the modern agency, or

advertising agency of the future, will need to become a communication specialist,

or a communication agency. Advertising agencies will need to move away from


33

their traditional fixed focus on advertising functions to integrated communication

and a more clearly defined marketing, sales promotion, public relations, direct

marketing and relationship marketing orientation. This research study refers to the

advertising agency of the future as the full service communication agency. The

following section summarises how Internet interactivity will change the

traditional role of the advertising agency.

2.4.1 Role of Interactivity in the Advertising Agency

The evolution of new technology and the Internet has introduced interactive

marketing into the agency-client relationship. Advertising industry growth and

marketers’ ability to effectively target niche markets using consumer databases

and the Internet is challenging traditional advertising methods (Hearn, Mandeville

and Anthony, 1998). Traditional advertising agencies have been forced to adopt

interactive marketing strategies in order to fulfil their clients’ online marketing

needs. There are five key areas addressed in relation to the role of interactivity in

the advertising agency: the need for change and challenges which lie ahead; why

agencies have been slow to get interactive; justifying the set up costs; whose

responsibility for servicing (in-house, agency or external)?; and unbundling in the

interactive medium.

Agencies also need to review their service structure, invest more expense in

purchasing equipment and talent to service their client’s new interactive needs and

endeavour to stay one step ahead of their specialist competitors. Challenges for

the traditional advertising agency as a result of the introduction of interactive

technologies include the inability to break out of traditional advertising thought

processes, a lack of understanding of interactivity and direct selling, and

ultimately, what’s really going on, on the web (Gilbert, 1999). Marketers and

advertisers are now actively choosing their business partners to tie together their

communications, e-commerce and business processes (Viewpoint, 1999). As a

result, traditional advertising agencies are redefining themselves, or facing profit

reduction or client-switching.


34

Maddox (1999) suggests three main influences as to why advertising agencies

have been slow to get interactive:

1. traditional advertising agencies just don’t get interactivity, or either they

have been too slow off the mark to act;

2. as a result of many agencies inability to get interactive, clients have passed

their interactive assignments from their traditional advertising agency to

interactive shops (web designers, hot shops etc); and

3. many advertising agency CEO’s are simply slow to realise the potential in

interactive marketing, which results in poor provision of niche services.

Riedman and Gilbert (1999) forward the proposition that while many traditional

advertising agencies were slow off the mark, which maybe costing them dearly

now, they argue that it’s also important to note the fluidity of industry

perceptions. For example, many industry professionals believe that their share of

the interactive market is only just opening up, while others perceive their actions

to be too late because many of the major players are already comfortably settled in

the marketplace (Riedman and Gilbert, 1999).

While Internet adoption has increased greatly, buying into the net is still a costly

exercise for many traditional advertising agencies (Riedman and Gilbert, 1999).

Justifying the expense that needs to be outlaid in order to run a business in the

interactive market, of which had yet to even prove profitable (Maddox, 1999) is

proving even more challenging for advertising agencies. And in many cases the

traditional advertising agency itself is not always the client’s first choice for

Internet advertising services and many marketers are actually calling web

developers and systems integrators first, for all their web-based marketing needs

and advertising agencies are last on the list (Williamson, 1999).

Furthermore, approaches to interactive marketing vary widely (Maddox, 1999).

Some agencies are setting up their own internal interactive units, while others

have created separate entities, or stand-alone businesses devoted to interactivity.

Then again other agencies have invested in the purchase of existing interactive

shops. The industry argument however, is that ‘integration is critical for marketers


35

to get the most value for their marketing dollars’ (Michele Slack, Analyst from

Jupiter Communications as quoted in Reidman and Johnson, 1999, para 6). The

integration of interactive strategies into the overall marketing plan will provide

agencies and marketers with the key advantage of being able to communicate the

brand essence across different media platforms (Maddox, 1999). Bob Schmetterer

(as quoted in Maddox, 1999, para. 12) argues that “interactivity is at the centre of

where advertising is going to be” and therefore needs to be central to the business

function, not a separate entity. The ability to plan forward, or at least react

quickly, and adapt to opportunities, which could impact greatly on one's business,

will be one of the key elements to business success for advertising agencies

(Bertini, 1997). In order to survive in the next millennium, advertising agencies

will need to invest heavily in this new media, acquiring professional, experienced

staff capable of operating in this niche interactive environment and by learning to

integrate interactive services into their core business (Maddox, 1999).

With the adoption and use of interactive technology, marketers are being

challenged by the need to ensure a consistent brand image and performance

tracking when using the practice of ‘unbundling’ and working with separate

agencies (Reidman and Johnson, 1999). An Internet business strategy is a whole

different thing to an advertising/marcoms strategy and therefore clients are

evaluating carefully whether to split their marketing projects between two

suppliers (their traditional advertising agency and an interactive specialist)

(Williamson, 1999). Whilst ‘unbundling’ in the interactive environment is more

time consuming for the marketer, this can still be achieved. Reidman and Johnson

(1999) however report on a Jupiter Communications study into perceptions of

how effectively traditional agencies could work hand in hand with their client’s

interactive shop. The study revealed that 60% of advertisers use a separate online

media agency and 65% said they use a separate agency for online media creative.

While in the immensely competitive marketplace many observers believe that the

tables will turn and soon many interactive media conglomerates will actually start

to buy out traditional advertising agencies (Reidman and Gilbert, 1999). The


36

structure and service offering of the traditional advertising agency is destined for

change as a result of the introduction of interactive advertising.

Some clients are demanding that their suppliers are able to mesh their online and

offline marketing activities (Williamson, 1999). So while there is a vital need for

further research into the interactive media (Petrecca, 1996) it is clear that the

evolution into interactive advertising will provide marketers with clear advantages

over other traditional above-the-line media, with opportunities to increase revenue

and reduce marketing costs (Hunt, 1998). Further implications for advertising

agencies in relation to the adoption of the Internet on the agency-client

relationship, are outlined in the following section.

2.5 Implications of the Internet for Agency-Client

Relationships

Numerous research studies have focused on advertising agency and client

relationships (Beard, 1996, 1999; Henke, 1995; Michell et al., 1992; Michell and

Sanders, 1995) and several studies have examined advertising on the web

(Berthon et al., 1996; Briggs and Hollis, 1997; Ducoffe, 1996; Leong, Huang and

Stanners, 1998). Although several researchers have studied the perceptions of the

Internet as an advertising medium (Ducoffe, 1996; Leong et al., 1998), very few

research studies have focused on the effect of the Internet on agency-client

relationships, and agency and client expectations of the Internet as a promotional

tool (Bush et al., 1998).

An important finding from the Bush et al. (1998) study revealed that advertisers

have begun to incorporate the Internet into their marketing communication mix.

Additionally, their research revealed that current industry thinking projects

greater Internet presence and that the Internet will become a major source of

product information. Their study also revealed uncertainty concerning the

effectiveness of the Internet and the Internet’s ability to provide a competitive

advantage. These issues were related to major barriers, including:


37

• utilisation of the Internet as a marketing tool;

• security and privacy issues; and

• the ability to measure the effectiveness of the Internet as a new medium.

Several other important findings in relation to the establishment and maintenance

of Internet advertising were also revealed in the Bush et al. (1998) study. These

three key findings reported include:

1) a level of Internet knowledge or skills was not (yet) incorporated into

hiring criteria;

2) the responsibility of establishing the Internet presence was performed by

the marketing or advertising manager; and

3) that computer or Internet experts within the company were responsible for

maintaining the website.

In follow-up research, Bush and Bush (2000) investigated the perceptions, use

and implementation of the Internet, among a group of national advertisers. This

extended research focused on examining the potential challenges the Internet will

create in the agency-client relationship. The study identified four major

challenges to integrating the Internet in IMC. These included:

• understanding each party’s value system (to eliminate role ambiguity);

• the blurring of functions;

• new competition; and

• the size of the organisation.

To minimise these challenges, Bush and Bush (2000) make the following four

recommendations:

1) clients and agencies need share the same perceptions or values with

regard to the use of the Internet;

2) organisational size and structure should not impact on overall perceptions

of the use of the Internet in client’s Internet marketing strategies;

3) both clients and agencies need to hold similar perceptions of the potential

ethical issues related to marketing on the Internet; and

4) there should be no major blurring of functions concerning the Internet for

both clients and agencies.


38

This section has provided a detailed overview of how the adoption of the Internet

as a promotional tool will affect the various advertising agency types, including

services offered, as well as the impact of the Internet channel on the agency-client

relationship. It has also drawn from current literature to highlight the implications

and challenges confronting advertising agencies as they integrate the Internet into

their service provision to clients. The following section now introduces the

concept of ‘value adding’ to further engage and assist explanation of agency-client

expectations of value of the Internet as a promotional tool.

2.6 ‘Value Adding’ and Perceptions of Internet Value

“If commerce is the engine of our economy, then advertising is the

spark. Responsible advertisers are the drivers who keep us on the

right track, leading to a richer, more benevolent society.”

(Brian Philcox cited in Richards, 1996, p. 58)

Client dissatisfaction with agency performance can occur when differences exist

between agency and client roles and expectations of each other. In order to

analyse what differences might exist between agency and client expectations of

the value of the Internet as a promotional tool, an evaluation of the expectations

of ‘value added’ is necessary. The following literature overviews current

marketing thinking about ‘value adding’ and then turns to a detailed discussion of

Parasuraman et al.’s, (1988) service quality framework.

2.6.1 What is ‘Value Adding’?

In order to ascertain whether clients are satisfied with their agency’s services it is

important to measure the value clients’ associate with all aspects of the agency’s

service offering. Value can be defined as the worth of the element; it comes from

the expectations of the offering, the experience that is gained through its use; and

from the residual of the exchange that creates the value (Ducoffe, 1996). While

there is no common understanding of what value added actually means (Moodhe


39

quoted in Mullich, 1992), Escover (1994) provides a workable definition,

defining value adding as anything that contributes to an increase in profits; or a

measure, with waste and redundancy being the targets. However, as thought by a

number of scholars, value adding has been referred to as a nebulous term that has

sometimes been used as a euphemism for discounts (Mullich, 1992). Escover

(1994) refines a marketing interpretation of value adding in his explanation of

value added functions, which relates to the direct contribution, generation,

delivery and customer satisfaction of a product or service. To Wood (1978),

added value is a form of wealth, generated by the efforts and ingenuity of

mankind. The shared meaning between these two definitions reveals that added

value is determined by the satisfaction of the consumer and not by the work of

the producer (Wood, 1978). For the purposes of this research study value adding

is defined as: “any method or action, which is perceived by the consumer to

create more value or extra worth to a project or defined objective.”

2.6.2 The Provision of Value Added Services

Pritchard (1998) states that companies need to add value at every transaction. For

the advertising agency every service or function provided, separate from the basic

or expected agency services, can be defined in terms of its value added

contribution. Tensions can arise in the agency-client relationship as a result of the

need to constantly provide added value services or incentives to the client. For

example, clients may become accustomed to receiving special media discounts,

or become accustomed to the agency organising cross promotional activities.

Such activities place pressure on the agency to provide additional added value

during every campaign. Value adding in the advertising agency environment can

take many forms, but agencies need to be sure of two key factors: 1) what value

added services the client expects?; and 2) understanding the client’s perceptions

of ‘value’.

Firstly, clients often seek value adding through information, free list rentals,

discounted rates, research surveys and targeted promotional mailings (Mullich,

1992) and for little, or no extra cost. This area of monetary compensation often


40

causes much disagreement, because clients may disagree on whether value added

services warrant additional payment. Agencies need to understand their clients’

objectives and barriers, and develop creative solutions to provide the client with

real perceived added value (Mullich, 1992).

Secondly, another concern when selling value added services to clients is

ascertaining what means value to each client. If gaps occur between the client’s

perceptions of value added and the agency’s perceptions of value added, conflict

could result between the two parties. It is also paramount that the agency does not

over value (Mullich, 1992) their services provided, ensuring that they have a clear

idea of the client’s perceptions, in order to avoid gaps occurring between what the

agency perceives the client views as value added and what the client actually

perceives as value added.

In order to sustain a long and healthy relationship with the client, advertising

agencies need to understand the strategic long term needs of the client and define

where the agency can provide value added options that the client will also

perceive to be value added. Once the agency has defined whether the client

expects and/or will pay for value added services and what constitutes ‘value

added’ to the client, agencies need to ensure that they monitor and measure on an

ongoing basis whether any gaps between client and agency expectations and

perceptions exist, in order to maintain a healthy and successful agency-client

relationship.

2.6.3 Internet Value

The value of the Internet as an advertising service in this study relates to utilising

the Internet as a new advertising medium or promotional tool to the benefit of the

advertiser. There are numerous benefits of using the Internet over a traditional

mass media channel. Firstly, the Internet provides an unlimited amount of

information for a consumer to access, at a time convenient to them. Secondly,

using the Internet as an advertising channel introduces ‘infotainment’ and

‘edutainment’ into the service experience, thus engaging and enticing the new


41

online audience and buy a client’s product, service or idea. New technologically

savvy audiences have greater control over their information collection and

purchase decision. And finally, apart from reducing wastage in the marketing

budget traditionally evident in above-the-line campaigns, more direct, personal

and rewarding relationships can be developed through advertising activities via

this new online channel.

Scholars have decreed that the Internet as an advertising medium possesses the

same qualities of a typical ‘service’ in marketing terms. Similarities exist between

a typical service and the Internet as an advertising medium (Dann and Dann,

2001; Lovelock, 1996), because the Internet is intangible, not a physical product,

and consumers use the service simultaneously with the provision of the service.

As a result of the similarities of the Internet to other marketable services,

predicting and measuring clients’ perceptions of Internet value and service

quality is very difficult to gauge.

Understanding whether the client perceives the Internet to add value to their

promotional mix and whether the agency provision of Internet services adds

value to the agency-client relationship assists the agency in ensuring that they

provide the level of services expected by the client. Like with various services

marketing measurement tools, analysing an agency’s individual client

expectations of Internet services and comparing to the level of Internet service

supplied by the advertising agency will assist the agency in identifying whether

gaps appear between client expectations and the agency’s service provision. In

order to maintain harmony in the agency-client relationship agencies need to

ensure that such gaps between client and agency Internet expectations do not

occur.

2.6.4 Measuring Gaps Between Value Perceptions

Perceptual differences or gaps could arise between what the client perceives to be

value added and what the advertising agency perceives to be value added. To

date, no research has been published that reports an investigation of perceptual


42

differences in ‘value added’ in relation to the agency-client relationship in the

B2B environment. Nevertheless, relevant literature in the B2C services marketing

can be drawn from to inform this study. A widely accepted and tested model used

in B2C services marketing, which was developed by Parasuraman et al. (1988) to

measure the perceptual differences in service quality, between business and

consumer service exchanges, has been adapted for this research study. The

following section provides an overview of this Parasuraman et al. (1988) service

quality model.

Parasuraman et al. (1988) developed and modified a conceptual model of service

quality during the 1980s (see Figure 2.3, on page 45). The rationale for this

model of service quality was that the perceptions consumers make are as a result

of the comparison of what consumers expect service firms should offer, with their

perceptions of the performance of the firm(s) providing the service offering. This

thinking has been unambiguously supported by the writings of Gronroos (1982);

Lehtinen and Lehtinen (1982); and Saser, Olsen and Wycroff (1978). The

Parasuraman et al. (1988) model was developed to measure the differences

between expectations of service quality and perceptions of service quality

delivered. Today the Parasuraman et al. (1988) model is widely known as the

‘SERVQUAL’ model.

SERVQUAL identifies five gaps where perceptual differences could occur when

measuring service quality. Four of these gaps originate on the marketer or service

provider’s side of the service encounter and one gap on the consumer’s side. Gaps

that occur on the service provider’s side were found to influence the consumer’s

service quality perception (Zeithaml, Berry and Parasuraman, 1988). Gap five in

the SERVQUAL model represents the perceived service quality (P - E = PSQ)

and is dependent on the four gaps on the marketer’s side of the model and their

respective size and direction (Zeithaml et al., 1988). One of the gaps Parasuraman

et al. (1988) identified is a gap within which there is a difference between what

consumers expect from the service and what the service provider perceives the

consumer to expect. This gap was labelled as gap one.


43

SERVQUAL is a multi-dimensional construct testing five reliability coefficients,

including (Parasuraman, Berry and Zeithamal, 1991):

1) tangibles: the physical facilities, equipment and appearance of employees;

2) reliability: encompasses the ability to perform the service dependably and

accurately as promised;

3) responsiveness: the willingness of employees to help consumers and

provide prompt service;

4) assurance: the knowledge and courtesy of employees and their ability to

inspire trust and confidence; and

5) empathy: represents the caring, individualised attention the company

provides to its consumers.

Parasuraman et al. (1991) identified and measured gaps between the perceptions

and expectations of service quality by using two 22-item scales. The first 22-item

scale measured the consumers’ service expectations of the company and the

second, the consumers’ perceptions of the service received from the company.

Parasuraman et al. (1991) tested their model of service quality by surveying a

sample of companies who provided telephone repair, retail banking and insurance

services, as well as a sample of their consumers. They also tested the consumer

and the service providers’ expectations of the service, prior to the provision of the

service and then their perceptions after service delivery.

Service quality is measured by marketers through the analysis of the difference in

consumers’ expectations of service quality to be received and their perceptions of

the service quality obtained through the actual delivery process (Babakus and

Boller, 1992; Brown, Churchill and Peter, 1993; Zeithaml et al., 1988).

Parasuraman et al. (1988) defines expectations as the desires or wants of

consumers, specifically what they feel the service provider should offer, rather

than what they actually do offer. If the service offering specifications do not

match the consumer’s expectations of the service offering, they will be

dissatisfied with the quality of the service delivered. The underlying principle in

this thinking is relevant and important in agency-client relationships.


44

Consequently, the principle will be applied to measuring perceptions of value add

and the discrepancies that might exist between the agency and the client’s

perceptions of the Internet. From this theoretical thinking the second research

question is derived:

What are the differences between agency and client expectations of the

value of Internet as a promotional tool?

Measuring the value of Internet services falls into the same category of difficulty

as measuring a consumer’s perceptions of service delivery. Providing Internet

services to an agency’s clients involves the intangible, heterogenous, and

simultaneous production and consumption aspects that are associated with general

services marketing. Services in general, are performed to provide an exchange or

interaction between two parties to the advantage of the consumer. This research

study primarily focuses on ‘gap one’ of the SERVQUAL model (as displayed in

Figure 2.3). Because the aim of the study is to measure whether there are gaps

between client and agency perceptions of the value of the Internet as a

promotional tool. In applying this gap methodology to the use or provision of

Internet services within an advertising agency, this study examines what clients

expect from Internet advertising services and what agencies perceive clients

expect from such services. Ultimately deciphering whether there are gaps between

the agency and client perceptions of the value of the Internet as a promotional

tool, and if so, the implications of such gaps.


45

Figure 2.3 Conceptual Model of Service Quality

(Zeithamal, Berry and Parasuraman, 1988, p. 36)

The client’s perception of the agency’s services performed and the agency’s

perceptions of their client’s satisfaction need to match up, in order for both

parties to be satisfied and content in the agency-client relationship. When agency-

client contracts are signed or negotiated, the client sets expectations for the

agency’s level of service performance. If, for instance, the agency thought the

client perceived the agency as performing at the highest standard of service, but

halla



46

the client’s perception was that the agency’s services were mediocre, a gap

between the perceptions of the client and the agency would appear. When gaps

occur between one party’s expectations and perceptions of service quality the

party often becomes dissatisfied with the service offering, which may lead to

conflict (Parasuraman et al., 1994). The wider the gap(s) between expectations

and perceptions, the more dissatisfaction occurs which could be detrimental to

maintaining the agency-client relationship. If the agency could measure whether

gaps between their client’s expectations and perceptions of the agency’s service

quality exists, then the agency could take counter measures to close these gaps

and ensure client satisfaction. Ultimately, this will lead to a sustainable and

profitable agency-client relationship. The following section outlines the action

agencies can take in order to close the gaps between agency and client

expectations.

2.6.5 Closing Gaps to Sustain Longevity in the Agency and

Client Relationship

Sustaining longevity in the agency-client relationship involves the agency

working to avoid gaps from occurring between the expectations and perceptions

of the agency’s service offering, which can be achieved through effective

communication and ongoing assessments of service quality. If aware that gaps

occur, agencies can investigate the source of the gap, fix the gap and avoid the

gap from occurring again. Providing quality service to an agency’s clients

involves the agency being highly pro-active. Agencies that work to ensure no

gaps occur between the client’s expectations and perceptions of the agency’s

service quality will be the most successful and will relish in a continued healthy

agency-client partnership.


47

2.7 Summary

This chapter has reviewed four relevant literatures: B2B marketing, Internet

marketing, advertising industry information and services marketing to describe

the value of the Internet as a promotion tool in agency-client relationships. It is

clear that only limited research to date has been published in relation to B2B

exchanges and perceptions of value of the Internet as a promotion tool in the

advertising industry. However, drawing from the B2C literature has been

valuable in explaining the potential value of the Internet as a promotional tool.

Furthermore, the discussion of Parasurman, Zeithamal and Berry’s (1988)

SERVQUAL model, which outlines service expectations and measurement of

service quality, provides a sound grounding for measuring the gaps between

agency and clients expectations of the value of the Internet as a promotional tool.

The following chapter now presents the research design and epistemological

influences that informed the survey methodology selection and analytical steps

undertaken in this study.

Chapter Three METHODOLOGY

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Chapter Three: METHODOLOGY

“Advertising people who ignore research are as dangerous as generals

who ignore decodes of enemy signals.” (David Ogilvy cited in Richards 1996, p.45)

3.0 Introduction

This chapter explains the research methodology used to test the overarching

research question in this study, that is: “How will the introduction of the Internet

as a promotional tool impact agency-client relationships?” The chapter outlines

the following relevant information, including discussion of the research design

used to address this research question, justification for adopting a survey research

method to measure agency-client expectations and the challenges and limitations

of using web-based data collection procedures; related to this discussion are issues

of sampling procedures and questionnaire design, which are overviewed. The

chapter concludes with a discussion detailing the ethical considerations made by

the researcher and a summary of the methodological limitations of survey method.

3.1 Theoretical Perspective

The methodology applied in this study is primarily of a quantitative social

research nature. As such, the researcher is guided by a positivist epistemology.

Positivism is the belief that an individual researcher can bias findings and

contaminate objective facts, and therefore such influence should be eliminated

(Neuman, 1994). A positivist approach assumes that social forces outside the

control of a person influences human behaviour and that free will is a fictional

notion and describes only those aspects of human nature that science has not as

yet discovered (Neuman, 1994). The investigation and understanding of laws and

patterns of social behaviour is central to positivism. Therefore, positivist research

concentrates on description and explanation, where thought is governed by

explicitly stated theories and hypotheses (Carson, Gilmore, Perry and Gronhaug,

2001). The research undertaken in this study is grounded in marketing theory and


49

uses hypothesis testing to examine relationships between agencies and their

clients in the advertising industry.

While critics believe that positivism reduces people to numbers, positivism is

highly objective, and allows researchers to measure items about people accurately

and test hypotheses from these measures (Neuman, 1994). Positivism is widely

recognised and applied in marketing research and practice, and positivist

researchers are more likely to engage in quantitative research, such as surveys,

experiments and statistics (Neuman, 1994). With a long history dating back to the

early nineteenth century, there are many versions of positivism, however in

general positivists favour objective research.

Researchers all have their own long term research goals and therefore they can

often develop their own justifications for any possible error or harm to their

research in the short term, based on the perceived long term benefit to society (de

Vaus, 1995). While this research study adopts a predominant positivist

perspective, qualitative data analysis is also utilised in this study to explain

opinions and attitudes in the research participants own words, in particular,

regarding the value of the Internet as a promotional tool. The following section

now turns to a discussion of the study’s research design and justification of

quantitative and qualitative analysis tools used to respond to the research question.

3.2 Research Design

Studies in marketing communication and advertising embrace both quantitative

and qualitative approaches in their examination of consumer and business

behaviours. Similarly this research study sought to gain both quantitative and

qualitative data from advertising agencies and their clients. LeCompte, Preissle

and Tesche (1993) posit that selection of an appropriate research design should be

based on two basic research matters. Firstly, consideration of the information

needed to effectively respond to the research question; and secondly, to devise a

strategy to effectively obtain the data and information. In responding to LeCompte


50

et al’s (1993) suggestions, various research methods were considered during the

planning phase of the research study. This included consideration of qualitative

methods such as focus groups, and in-depth interviews to gather rich description

of agency and client’s experiences of the Internet. Alternatively, a quantitative

survey research method, using telephone or web-based data collection approaches

were also considered. Ultimately, a web-based survey method was considered

most appropriate because the research involved gathering data from a substantial

international agency network (n=131). Methods of telephone survey and

qualitative data collection were thought to be either prohibitive or unrealistic

given the researcher’s timeframe and resources available to conduct the study.

3.2.1 Qualitative Data Gathering Approaches

In planning the research design for this study, focus groups were considered to

collect questionnaire information from both agency and client prospects. Largely

non-quantitative, focus groups provide an opportunity for researchers to introduce

and discuss various issues, probing members and encouraging discussion

(Neuman, 1994). Usually focus groups are conducted by a moderator with a small

group of people, are relatively inexpensive to run, and permit a greater degree of

member participation than other survey methods (Dann and Dann, 2001). Open-

ended questions tend to be most common and successful in focus groups

(Neuman, 1994), as the moderator can explain questions clearly to the members,

increasing the rate of comprehension and understanding. The interactivity of the

Internet has recently permitted researchers to be able to conduct focus groups

across geographically dispersed areas (Dann and Dann, 2001).

While there is much value in conducting focus groups, due to the size of the

international agency network at the centre of this study, conducting focus groups

would have proven very costly. Aside from the costs involved in running focus

groups, the conduct of focus groups would also have meant making a selection of

participants from the international agency network. Deciphering the selection

criteria for the agencies who would participate in such focus groups would have

proven an ominous task, due to each agency’s differences and cultural and


51

financial agency status. Apart from the agency portion of this research study, the

personal nature of some of the client survey information and the possibility of

some clients being competitors on an international scale, also ruled out the use of

focus group methodology.

Although in-depth interviews often require the longest questionnaires these can

equate to the highest survey response rates (Neuman, 1994). Face-to-face

interviews provide researchers with the advantage of being able to observe non-

verbal communication and provide and explain visuals more easily. These

advantages are combined with gathering rich detailed data that may describe the

participants’ feelings and decision-making styles more comprehensively, than

could be gathered from open-ended survey questions. Conducting in-depth

interviews with all possible agency and client respondents would have involved

an expensive and time-consuming process. And like with focus groups, the

financial costs were prohibitive. Whilst, in-depth interviews could have been

conducted by telephone or video conference, scheduling appropriate times (due to

the worldwide scale of the survey) for the agency/client respondents to be

available to exchange or even ensuring technology was available (eg. video

conferencing capabilities) would have proven a time-expense transferred to the

participant, which would have been considered prohibitive in the competitive


3.2.2 Quantitative Data Gathering Approaches

Personal telephone surveys and automated telephone surveys were initially

considered as possible methods, ultimately however these were not incorporated

in the research design. Although telephone channels could have allowed the

researcher to talk directly to the appropriate agency/client respondent and thus

providing an opportunity to clearly explain the survey questions and clarify

possibly confusing questions there were several barriers using a telephone survey

method for data gathering from an international advertising network. Such

barriers included:


52

• costs - international telephone call costs and time period for telephone call

to complete the survey questions;

• time – ensuring telephone call could be made at an appropriate time for

both parties. Apart from international time zone differences, Managing

Directors of advertising agencies and Marketing Managers on the client

side lead very busy lives and therefore are not always readily available to

complete research surveys at specified times;

• language barriers – as a result of the international scope of the study it

could not be guaranteed that the most appropriate respondents would also

speak English. Funds were not available to conduct this research in

languages other than English.

Survey research using a preformatted questionnaire that included likert-scale short

answer response items was therefore selected as the most appropriate data

gathering method for this study. The following section now turns to a detailed

explanation and justification of the survey method used in this study. Firstly

however, the sampling procedure used in the study is outlined and justified.

3.3 Survey Sampling and Procedure

This study employed a non-probability sampling approach. A non-probability

sample occurs where people have a greater, but unknown chance than others of

selection and are used in situations where probability sampling techniques are

either impractical or unnecessary (Babbie, 1995; de Vaus, 1991). In this study the

sample involved recruiting participants from an international network of

advertising agencies and agency clients, across a worldwide population. A

snowball sampling strategy was adopted as the agency sample was related to the

client sample (Neuman, 1994) and the survey research was collected using a

multistage process. Neuman (1994) points out that probability samples are

preferred by quantitative researchers, however, due to the scope and research

focus on agency and client perceptions, a non-probability sampling procedure was

considered adequate because members of the international network being


53

surveyed held the relevant experience and knowledge required to respond to the

survey questions. The following section outlines the web survey administration

implemented during data collection.

3.4 Rationale for Survey Research Method

Survey research is one of the most important and commonly used research

methods for collecting primary data (Assael, 1993). Kotler (1994, p.135) suggests

that survey research “stands midway between observational and focus group

research, on the one hand, and experimental research on the other hand”. Survey

method is therefore well suited to a descriptive analysis on agency and client

perceptions of the value of the Internet as a promotional tool. Importantly, the use

of survey research method in this study did not preclude the researcher’s ability to

collect both quantitative and qualitative data from a wide, dispersed geographical

location of sample groups. Three additional rationales supported the selection of

survey research in this study. Firstly, survey research was utilised due to the

sensitive nature of the information collected from the questionnaires (for example,

a listing of an agency’s top three billing clients or sales levels attributed to the

Internet). Secondly, the quantity of information required for analysis lead to

survey research being the most appropriate research method. Finally, the cost

restrictions due to limitations on research funds meant other possible survey

methods such as in-depth interviews, telephone interviews and focus groups

would have been prohibitive.

Survey data can reveal the descriptive, quantitative information that can be used

to measure peoples’ beliefs, knowledge, preferences, and level of satisfaction

(Kotler, 1994). In this study, data is used to relate the B2B environment in the

advertising industry and Internet use as a promotional tool. The SERVQUAL

service quality measurement model (as formulated by Parasuraman et al., 1988,

1994) was replicated in the survey instrument in order to ascertain if gaps exist

between agency and client expectations of Internet value. A further innovation of

the research undertaken in this study was incorporating the use of a web-based


54

survey data collection approach to gather participant responses. The following

section briefly outlines the advantages and limitations of incorporating web-based

data collection tools in the research design.

3.4.1 Web-Based Survey Method

The online questionnaire was selected as the primary survey data collection

method due to the worldwide dispersion of advertising agencies and clients in the

sample groups. The advantages of using the Internet as a data collection tool are

many and varied. Firstly, the Internet permits numerous questionnaire design

formats. Secondly, it allows for various sequencing options and the inclusion of

audiovisual elements. Lastly, an Internet questionnaire can permit the

transmission and receipt of information faster and less expensive than any other

mode (Best and Krueger, 2004). The online questionnaires for this study which

were sent out via email, provided a fast and efficient way for survey respondents

to review and complete questions with ease. Additionally, the ability to

incorporate open-ended questions also combined some advantages of interviews

with the advantages of traditional ‘snail’ mail (Jones, 1999). Using both email and

Internet channels for the dispersion and completion of the questionnaires also

enabled respondents to complete the questionnaire at a time most convenient for

them. The use of email also allowed the researcher to submit follow-up emails to

any respondents who had not completed and submitted their survey within

specified time periods, hence increasing survey response rates. One of the primary

disadvantages to conducting an online questionnaire for survey research, is that on

a worldwide scale many people still do not have Internet access. However, in the

context of this research study it was implied and accepted that advertising agency

Managing Directors and client Marketing Managers would have access to Internet

facilities. The following section outlines the advantages of using the Internet as a

data collection tool and the administration of online questionnaires in survey

research.

There were four key advantages associated with the design and submission of

questionnaires using a web-based survey approach. Firstly, using email via the


55

Internet to send out the questionnaires to respondents allowed the questionnaires

to be delivered to respondents without any time restrictions (as emails can be sent

instantly and generally can be received in a matter of seconds or minutes), and

allowed the respondents to complete the questionnaire at a time most convenient

to them (Assael, 1993). These were important considerations to the design of this

research study, due to the fact that the sample was so widely dispersed and

spanned numerous time zones.

Secondly, the configuration of the questionnaire on a designated Internet site was

advantageous, as this allowed the researcher to gain a large amount of information

with a small amount of difficulty. All that the survey respondents were required to

do, was click on the hotlink on their email (the address of the website), complete

the questionnaire and then click on the submit button. The questionnaire results

were then automatically forwarded to a Queensland University of Technology

web page and database, designed specifically for this study’s data collection.

Thirdly, using a web-based survey approach lowered the chance of respondent

bias, due to the lack of interaction with an interviewer or other survey respondents

(Assael, 1993). Finally, the submission of questionnaires via email and Internet

access was advantageous, as it provided an inexpensive method of data collection

in comparison to other research methods of in-depth interviews and telephone

interviews as discussed previously in this chapter. A discussion on the

administration of the agency and client questionnaires is included in the following

section.

3.5 Web-Based Survey Administration

For this study a two-stage data collection procedure was developed using online

questionnaires. Firstly, a sample of advertising agencies, as outlined in Section

3.3, were asked to complete a questionnaire via the Internet. (See Appendices A

and B for samples of the agency and client questionnaires and Appendices C and

D for the survey coding of these respective questionnaires). Included in this


56

request was an additional question asking respondents to provide contact

information for their three largest billing clients, for the purpose of completing a

client-based questionnaire. The second stage of the survey’s administration

involved sending out a customised questionnaire to each of the client contacts

provided by the sample agencies. Email was used to extend the invitation to

participate in the study to both agency and client respondents. A hyper-link to the

online questionnaire and database was imbedded in the email request for

completion via a click-through to the dedicated website.

Based on the assumption that both sample groups did not have a lot of free time to

complete questionnaires the first section of both questionnaires was designed to

be short-answer, via click-button responses. The click-button responses were used

to encourage the respondent to complete the questionnaire easily, giving the

respondent an efficient means to input and submit their responses. Detailed,

explanatory information describing the purpose of the survey and questions was

achieved through this channel. The use of an online survey also enabled the

researcher to program all responses directly through to an online database for

analysis, once the research participant clicked on the ‘SUBMIT’ button. For

participants who might have been uncomfortable with this technology, an

alternative method of completing the survey was provided. These respondents

were provided with a copy of the survey via fax or mail and the completed

surveys was returned via these channels.

Three data collection strategies were employed during web-based survey

administration in an effort to increase the survey response rate. These strategies

included:

1. Pre-survey notification phase. During the pre-survey notification phase a

list of possible survey respondents, either being the Managing Director or

General Manager for each network agency and their email address was

obtained from the agency network’s 1999 worldwide directory and

website. The Managing Director of the Brisbane agency (the research

base) supported this research and volunteered to write a pre-survey email


57

(see Appendix E) to all agency participants. The purpose of this

preliminary email was to introduce the researcher and bring to the

agencies’ attention the objectives of the research study, thereby requesting

their co-operation and participation. This preliminary pre-survey email

advised the agency respondents that they would receive an email from the

researcher within the next few days. The pre-survey email was sent out to

the first round of agency survey respondents on the 1st October 1999.

Initially this first contact was sent to those agencies within the

international network located within English speaking countries only.

2. The call to participate phase. The call to participate phase included the

researcher’s introduction to the study and various measures to increase the

response rate. Firstly, the communication was sent via email (see

Appendix F). Accompanying the email was an outline of the research

objectives and the promise of a copy of the research findings, should the

agency participate in the research study. The contact details of the

researcher were provided to the respondents on all items of

communication, should the respondent have required any further

information or assistance. Additionally, a letter of recommendation from

the Queensland University of Technology research supervisor overseeing

this research study was attached to demonstrate the University’s support

for the research (see Appendix G). All of these actions were initiated in

order to increase credibility of the research, as well as increasing

awareness of future email contact, and ultimately increasing the

questionnaire response rate.

3. Email reminder phase. The email reminder phase followed nine working

days after the call to participate email was sent out. This first follow-up

reminder email (see Appendix H) included a link to the online

questionnaire. The second prompter email was sent out to those

respondents who had not completed the questionnaire seven working days

after the first follow-up email. Follow-up emails then continued to be sent

to those respondents who had not completed the questionnaire on a weekly

schedule.


58

Those respondents within the sample group who had completed and

submitted their questionnaire were either removed from the follow-up

email lists or contacted again via email if they failed to complete all

necessary survey questions. For example, several advertising agencies

within the sample did not complete question 46, which involved supplying

the names and contact details of their top three billing clients. As this

client information was necessary for the second phase of this research

study, the client questionnaire, these agencies were re-contacted via email

and asked to provide this vital information. A rationale outlining why this

client information was necessary and an explanation of how the agency’s

clients would be contacted was also provided. To assist in increasing the

survey response rates for these select agencies, the follow-up emails were

first sent out on a weekly basis and then as the response time grew longer,

respondents were again sent an email with the survey link attached, every

two to three days over the specified follow-up period.

Approximately three months after the first round of agency questionnaires were

sent out, the second stage of agency questionnaires were despatched to a wider

segment of the worldwide population (including all agencies within the worldwide

agency network, not just those in English speaking countries). Follow-up

reminder emails began approximately two weeks after the agency respondents

received the questionnaire via email and the agency survey cut off dates were

March 2000 for stage one and May 2000 for stage two agencies. The number of

completed agency questionnaires directly influenced the number of client contacts

that could be made, which ultimately affected the number of completed client

questionnaires (see Appendix I for sample of client questionnaire letter of

introduction and Appendix B for sample of client questionnaire). All client

questionnaires were sent out in a staggered order, based on when the agencies

provided their client contact details. An explanation of the procedural information

regarding the dispersion of the agency and client questionnaires and efforts

undertaken to ensure the collection of accurate, valid and quality survey data is


59

detailed in Appendix J. The data collection procedure utilised assisted in

increasing the response rate to the study. The following section will now describe

the structure and content of the two questionnaires designed to collect survey

respondents’ attitudes and options of the Internet as a promotion tool.

3.6 Questionnaire Details

Questionnaires are one of the most commonly used survey research tools in

management research and are highly useful when data is required from a

representative sample of a wider population, as was required in this research study

(Ticehurst and Veal, 1999). This study required the development of two

questionnaires: one tailored for agency respondents, the other for their clients. It

was necessary to design and submit two questionnaires tailored to each sample

group, since certain data was required from the client sample, but not required

from the advertising agency sample and vice versa. For example, a comparison

between the services utilised by clients (such as marketing, public relations, sales

promotion and Internet services) and those general services provided by their

advertising agency could only be obtained through separate and individualised

questionnaires. Also, the variable of overall advertising agency performance,

which was asked on the client questionnaire, was not necessary on the agency

questionnaire. Apart from these necessary variations in survey questions, there

were several survey questions for both agencies and clients that were matched for

comparative analysis.

The basic structure of both questionnaires was identical, each consisting of three

sections. The first section contained all SERVQUAL adapted questions in relation

to Internet service expectations. For the purposes of this research study the

SERVQUAL questions required adaptation from their original standard services

questions to apply more specifically to advertising agency industry, the services

provided and client and agency use of the Internet. The second section focused on

Internet usage and value perceptions; and final section encompassed agency and

client characteristics including company size, life span together, perceptions of


60

each other and overall perception of the value of the Internet as a promotional

tool. The agency questionnaire totalled 49 questions while the client questionnaire

comprised a total of 42 questions. The majority of questions on both

questionnaires were answered by simple click-on button responses or via drop-

down menu bars. Both questionnaires concluded by collecting qualitative data

with an open-ended Internet specific question, whereby both agencies and clients

were asked to express the views of their agency or company as a whole. Each

questionnaire was estimated to take the respondent approximately ten minutes to

complete via the Internet. A discussion of the questionnaire content, structure and

format follows for both the advertising agency and client questionnaires.

3.6.1 SERVQUAL Measurement and Item Adaptation

The first section of both the agency and client questionnaires explored Internet

service expectations (see Appendices A and B respectively). This section in both

questionnaires comprised the 26 adapted SERVQUAL related click-on button

responses. As discussed in Chapter Two, the Parasuraman et al. (1988, 1994)

SERVQUAL model identified gaps that can exist between a consumer’s (i.e.,

client’s) expectations of service quality and their perceptions of the service quality

experienced. Parasuraman et al.(1988) measured these gaps using two 22-item

scales. The first 22-item scale measured the consumers’ service expectations of

the company and the second, the consumers’ perceptions of the service received

from the company. SERVQUAL is a multi-dimensional construct testing five

reliability coefficients including tangibles, reliability, responsiveness, assurance

and empathy (Parasuraman et al., 1991). Tangibles include the physical facilities,

equipment and appearance of employees. Reliability encompasses the ability to

perform the service dependably and accurately as promised. The responsiveness

dimension includes the willingness of employees to help consumers and provide

prompt service. Assurance encompasses the knowledge and courtesy of

employees and their ability to inspire trust and confidence. The fifth dimension

empathy, represents the caring, individualised attention the company provides to

its consumers (Parasuraman et al., 1988).


61

The gap methodology as devised in Parasuraman et al.’s (1988, 1994)

SERVQUAL model has been adapted and modified to serve this research context

(see Appendix K), which was to measure whether gaps exist between client and

agency perceptions of the Internet. The original SERVQUAL questions were

modified to focus on the services provided by advertising agencies, with particular

application to Internet use. For example, the original SERVQUAL question of:

“Materials associated with the service (such as pamphlets or statements) will be

visually appealing in an excellent telephone company” was adapted in this

research study to: “Materials associated with the Internet / web design services

will be visually appealing in an excellent advertising agency”. Several new

questions were also added to this modified SERVQUAL instrument, under the

tangibles and reliability coefficients, for example:

• New tangible question: “Excellent advertising agencies will have top of

the line computer hardware and software for Internet use”.

• New reliability questions: “When clients have a problem related to

advertising on the Internet, excellent advertising account representatives

will work effectively and efficiently towards solving the client’s problem”;

and “Excellent advertising account representatives will provide clients

with comprehensive background research on their strategies for

advertising on the Internet”.

The Internet service expectations questions were purposefully designed not to be

too commercially intrusive (for example, dollar billings per client was not asked),

in order to prevent any negativity toward the research, which could have

hampered the completion of the questionnaire. The more sensitive information

regarding client account size and contact details, were positioned in the final

section of the questionnaire. The assumption was that the agency respondent

would be more likely to answer these more sensitive questions when placed at the

conclusion of the questionnaire based on the idea that trust and credibility would

have been built during the time taken to complete the previous sections of the

questionnaire.


62

The response items within this modified SERVQUAL model were made up of a

4-point, plus ‘no opinion’, likert scale, as successfully used by Richens (1997).

While 5-point likert scale is the most common interval scale (de Vaus, 1995;

Page, 2002; Sclove, 2001;) used in survey research, typically taking the format of:

1 – Strongly Agree, 2 = Agree, 3 = Neutral, 4 = Disagree, 5 = Strongly Disagree;

the ‘neutral’ ranking was altered in layout for this research study and moved from

the middle ‘3’ ranking to the end of the scale – ‘5’. In applying the likert scale to

this research study the scale responses ranged from ‘strongly disagree’ to

‘strongly agree’, with the ‘no opinion’ response. The 4-point plus ‘no opinion’

likert scale was selected over a 5-point or 7-point likert scale as the researcher

wanted to accurately gauge the respondents’ agreement or disagreement on a

particular question, by forcing them to select a more definite indicator for their

response.

As previously noted, two questionnaires were designed to collect responses from

agency and client research participants. The following discussion now outlines the

design of relevant questions for the two different samples. The agency

questionnaire will be described first, which will be followed by a description of

the client questionnaire.

3.6.2 Agency Specific Questionnaire Items

Following the SERVQUAL section, the second section of the agency

questionnaire was designed to reveal the level of usage and perception of the

value of the Internet as a promotional tool. The perceptions of Internet value

section in the agency questionnaire consisted of 17 questions relating to: Internet

usage by agency’s clients; the agency provision of Internet services and other

standard agency services; perceptions of Internet value; and the industry sectors

perceived as being applicable to Internet advertising. Of vital importance in this

section was the question which asked whether any of the agency’s clients

advertised on the Internet. This question allowed the respondent to skip to the next

relevant question should they have responded with a ‘no’. However, if the

respondent answered ‘yes’ to the Internet usage question, the questionnaire


63

continued on to ascertain what percentage of clients advertised on the Internet,

and if any of these clients were from the agency’s top three billing client accounts.

Following on from the client Internet usage question, the agency questionnaire

then asks questions in relation to the provision of Internet services offered to the

agency’s clients (for example, general advertising, marketing, public relations,

website design, website maintenance, web media planning, personal selling, or

other). The percentage of agency billings that could be attributed to the provision

of Internet advertising services and how long the agency had been providing

Internet advertising services to their clients was also asked in this section of the

agency questionnaire, in order to gain an understanding of how involved agencies

have become in the provision of this new service offering and how successful

their efforts have been.

Two important Internet perception questions within this section asked firstly,

whether the agency perceived the Internet to add value to their clients’ existing

promotional mix, secondly, whether the agency thought any of their clients

perceived the Internet to be a valuable promotional tool and finally if they had

indicated that they did believe their clients would perceive the Internet to be a

valuable promotional tool, they were then asked the percentage of their clients.

The perceptions of Internet value section of the agency questionnaire concluded

by asking respondents what industry sectors they felt would be most suitable for

Internet advertising (providing a selection of industry criteria for the respondent to

choose from), whether the agency had recently pitched Internet advertising to any

of their clients and how receptive they were to the Internet advertising pitch.

The final section of the agency questionnaire explored more personal information

about the advertising agencies and their clients. The agency respondents were

asked to indicate the number of employees in their agency and the number of

client accounts held by the agency. Then respondents were asked to provide

details on their top three billing client accounts, including: the client account

name, contact person, telephone number and email address. This information was


64

required so that the client questionnaire could then be sent out to the contact

person for each of the agency’s top three billing client accounts. The

questionnaire continued on to ask the respondent to indicate what proportion of

their agency billings were derived from their top three client accounts and to

further breakdown this percentage between their top three client accounts. For

example, if an agency’s top three billing accounts equalled 50% of the agency’s

billings, this 50% might have been made up by: 70% - largest client; 20% -

second largest client; and 10% - third largest client.

The agency questionnaire concluded with an open-ended question asking the

respondent to provide their agency’s view on Internet advertising. Respondents

were then provided with the opportunity to supply their email address, if they

would like to receive a copy of the findings from the research study, before

clicking on the SUBMIT button to conclude the agency questionnaire. Once the

respondent clicked on the SUBMIT button all responses were automatically sent

directly through to the online database.

3.6.3 Client Specific Questionnaire Items

As noted in Section 3.6.1, the first section of the questionnaire emailed to clients

included the adapted SERVQUAL measure. (see Appendix K). Following these

questions about perceptions of Internet value was a section designed to investigate

clients’ Internet usage and the forms of the Internet used in the advertising of their

business. Additional questions in this section examined who was responsible for

the development and maintenance of Internet services and Internet advertising

strategies, as well as the period of time they had been online. These questions

aimed to investigate who was responsible for the client’s specific Internet

functions (i.e., their advertising agency or other), such as developing advertising,

marketing and public relations strategies; providing personal selling opportunities;

and website design, maintenance and web media planning. The remaining

questions in this section were designed to probe whether clients could attribute

sales to their Internet advertising efforts.


65

Similar to the agency questionnaire, the perceptions of Internet value section of

the client questionnaire asked client respondents whether their company used the

Internet to promote and/or sell their products or services. For those clients who

indicated that they do advertise on the Internet, the client questionnaire asked who

provides the specific Internet functions to their company, including in-house, ad

agency, Internet designer and other, as the response items. Concluding the

perceptions of Internet value section the client respondent was asked whether their

company perceived the Internet to add value to their existing promotional mix,

and whether they thought their advertising agency perceived the Internet to be a

valuable promotional tool.

The final section of the client questionnaire investigated client characteristics.

This section opened by firstly asking respondents the time period that the

company has been working with their advertising agency, and secondly what

specific promotional activities were used by their company, and which of these

activities were handled by their advertising agency. Clients were then asked to

rate their advertising agency on three criteria: overall creative, task performance

and value for dollars spent. Finally, the questionnaire concluded with an open-

ended question which asked for the client company’s view of the Internet as a

promotional tool. Client respondents were then asked to click on the SUBMIT

button to complete the questionnaire, which like the agency questionnaire setup,

automatically sent all client responses directly through to the online database. The

opportunity to receive a copy of the findings from this study was not offered to

client respondents, as the opinions of the advertising agencies and their clients

collected for the purposes of this research study were intended only to be made

available to the international advertising agency network and Queensland

University of Technology.


66

3.7 Ethical Considerations

In conducting survey research to ascertain perceptions of service quality and

Internet use, across an international playing field, it was important to ensure that

data was collected and reported correctly. Thus the researcher attempted to

minimise any potential biases or misinterpretation of the results. In order to ensure

a high level of ethical standards required for this survey research, the agency

questionnaire was designed to be sent out to all agency respondents first, in order

to advise them of the research method and the researcher’s intention to contact

their agency’s top three billing clients.

An important ethical consideration in survey research is the invasion of privacy

and confidentiality (Neuman, 1994). During the research study every effort was

undertaken to protect the privacy of the agencies and clients who were involved in

the survey research. Only advertising agencies listed as members of the

international agency network were contacted for participation in the research

study. All contact details were gained through the public directory of contacts.

The online database was secure and only able to be accessed through password

and programming, available only to the researcher and the IT supervisor assigned

to this study. Once the survey collection phase was completed the online database

was removed from the online environment. The name of the advertising agency

network and the individual agencies and clients who responded were withheld and

kept commercially in confidence, as both the advertising agency and clients’

businesses operate in highly competitive industries. All agencies within the survey

sample were advised of the research aims and objectives and of the fact that the

research findings would remain private to international agency network and QUT

only.


67

3.8 Limitations in Methodology

Three methodological limitations were identified during the design of the

questionnaire and web-based administration used in this study. These include

limitations in using email to administer the ‘call to participate’ in the study, issues

related to questionnaire design and the impact of self-selection bias in the sample

population. The following section will briefly discuss these limitations and reports

on the efforts that were undertaken in order to prevent these limitations from

affecting the questionnaire response rate or survey results.

Apart from the advantages of using email to send out the questionnaires and

correspond with all survey respondents, seven key limitations were identified in

the use of email to administer the ‘call to participate’ for this study. These

limitations were addressed during the design and implementation of the research

study in order to increase the survey response rate, as follows.

1) There is a lack of opportunity for researchers to intervene and explain

survey questions during web-based surveys (Assael, 1993). Therefore

the comprehension and understanding of questions was left solely up to

the interpretation of the respondent. However, in order to increase the

questionnaire response rates, and gain the most accurate and reliable

results, the researcher spent valuable time assessing each survey

question to make sure that each question would be clearly interpreted

and understood by the survey respondents.

2) The researcher does not have direct control over the respondents’

completion of an online questionnaire, nor the time frame in which they

submit the questionnaire. Traditionally it takes a longer period of time

to gather results from mail surveys, as opposed to other research

methods such as focus groups and telephone interviews (Assael, 1993).

However, as previously discussed, the use of email in this research

study did reduce the questionnaire delivery time greatly.

3) Email surveys tend to achieve a response rate of 10% and lower, as

opposed to traditional survey research (Jones, 1999). Mail surveys

however, generally gain low response rates that can affect overall


68

reliability of the sample (Assael, 1993). Therefore based on the

worldwide distribution of the sample groups, the use of email was

selected as the most appropriate survey method, over traditional mail

questionnaires. In order to increase the survey response rates,

personalised emails were sent out to all survey respondents, clearly

defining the objectives of the survey research and the task of the

respondent.

4) Although email provides the advantages of ease of use and fast

distribution, email is a communication tool that people can easily

ignore. Unseen emails, email messages from unfamiliar sources or

messages deemed not important, can simply be ignored, overlooked or

deleted from an inbox. In order to increase the response rates of both

the agency and client questionnaires, regular emails were sent to the

respondents often using different subject headers and alternative email

copy, in an effort to encourage the respondents to spare some time to

link to and complete the questionnaire and submit their results.

5) Incorrect or invalid email addresses could prevent questionnaires from

reaching sample respondents. In an effort to increase response rates all

emails containing both the client and agency questionnaires were

tracked and receipted in an attempt to identify those respondents who

were either not actively on-line or whose email addresses were not

valid. Those agencies who were either not successfully contactable via

email or did not have an email address recorded, were contacted via

facsimile.

6) A lack of Internet access required to complete a web-based

questionnaire had the potential to reduce the survey response rate. To

overcome this potential limitation in all communication with the survey

respondents they were advised that if they had any problems accessing

the questionnaire on the Internet site, or if they did not have Internet

access to notify the researcher and they would receive the questionnaire

via facsimile, to complete and fax back to the researcher. The advice to

respondents proved effective in increasing the response rate, as the


69

researcher received several completed surveys via facsimile and

standard mail.

7) The final limitation identified from the web-based survey research

conducted, involved possible difficulties with clicking through from the

survey email to the web-based questionnaire. In an effort to increase the

survey response rates internal testing to 10-15 subjects locally was

performed. The testing process involved testing the readability of the

email copy, the clarity of the survey instructions and the ease of

clicking through to the online questionnaires. The data collection tool

(online database housed off QUT website) was also tested by recording

that the results from these internal tests effectively registered and were

permanently recorded in the online database.

After reviewing the perceived email tool limitations several proactive survey

methods were applied to the questionnaires in an effort to increase the reliability

of responses and the overall survey response rates. These measures included the

use of explanatory introductions and prompters and the inclusion of friendly

‘thank you’ notes within the questionnaire body, to create a warm and friendly

environment for the respondent who was often communicating sensitive

information.

The second methodological limitation involved the use of a 4-point plus ‘no

opinion’ likert scale within the first section of the agency and client

questionnaires, measuring Internet service expectations. Some marketing

researchers argue that the use of such a 5-point scale limits statistical analysis and

the resulting findings. In marketing research the 7-point likert scale is preferred in

order to gain more statistically significant results. Although both de Vaus (1995)

and Richens (1997) have successfully used and recommend the 5-point likert

scale for marketing research. In this research study the 4-point, plus ‘no opinion’

scale was selected and implemented over the 7-point likert scale because the

researcher wanted to accurately gauge the respondents’ agreement or

disagreement on a particular question, by forcing them to select a more definite

indicator for their response.


70

A final limitation to the methodology used, was the impact of self-selection bias

in the sample population. Self-selection bias occurs when survey respondents are

given a choice to participate, which almost always biases the results because

individuals who participate in surveys are more keenly interested in the issue than

are other members of the population (White, 1996). Those members in the

population who decline to participate, will reduce the ability of the results to be

generalised to the entire population (de Vaus, 1995). As a result, there is reduced

confidence in the survey results, because groups that declined to participate may

differ in their perception of the value of the Internet as a promotional tool,

compared to those that did respond. However, most surveys incur a self-selection

bias. Whilst there are methods of double sampling to deal with those respondents

who chose not to participate, this is a costly exercise, which was prohibitive for

the current study.

3.9 Summary

This chapter has outlined the rationale for selecting survey research methodology

to address the research questions outlined in Chapter Two. This chapter has

described the theoretical perspective of positivism that has informed the study and

outlined the research design. Additionally, the chapter has described the

questionnaire design and justification for using non-probability sampling to

recruit relevant research participants to respond to the survey. Discussion has also

highlighted the advantages and disadvantages of using web-based survey

administration in this study. The chapter concluded with an overview of the

ethical issues considered by the researcher. Chapter Four now turns to a

discussion of data analysis and research findings arising from the application of

this methodology.

Chapter Four ANALYSIS OF DATA

71

Chapter Four: ANALYSIS OF DATA

“Advertising research is one-half frustration, one-half exclamation

point, and one-half question-mark. If this adds up to more than 100

percent, it proves that mathematics and research sometimes gives

confusing results.” (Michael Ryan cited in Baker 1968, p. 144)

4.0 Introduction

This chapter presents the findings using the methodology discussed in Chapter

Three. The first section of the chapter discusses a preliminary analysis of the data

using descriptive statistics, which describes the sample of agencies and clients that

responded to the survey. The next section of the chapter then presents a more

detailed analysis of the agency-client relationship using bivariate and multivariate

techniques including Pearson’s Chi-Square cross-tabulations, independent t-tests

and ANOVAs in order to apply the modified SERVQUAL model to measure gaps

in Internet service expectations. All computation of statistics was carried out using

SPSS 11 (Systat Software Inc., 2000). The chapter concludes by elaborating the

statistical findings with qualitative statement which further explain the provision

of Internet advertising services and the agency-client relationship.

4.1 Quantitative and Qualitative Data Analysis

A combination of quantitative and qualitative data analysis was used in this

research study. This strategy was utilised in order to provide a comprehensive

reporting on all results using both statistical data analysis and a descriptive

qualitative analysis. The use of quantitative data analysis in this study involved

the use of a specialised, standardised set of data analysis techniques which were

based on applied mathematics (Neuman, 1994). Specifically, analysis focused on

understanding SERVQUAL variables and causal explanations, statistical analysis

of data to test hypotheses and the examination of the agency-client relationship

and their value perceptions of the Internet. Following the quantitative analysis,

qualitative data analysis has been incorporated in order to elaborate the


72

quantitative findings and more closely examine any patterns of relationships

within the data. Such analysis is less standardised and inductive. While

quantitative analysis cannot commence until all data is collected and transposed

into numbers to form patterns or relationships, qualitative analysis can commence

earlier on, while data is still being collected. In application to this research study

however, both the quantitative and qualitative analysis commenced once all data

had been collected and recorded. In this chapter the analysis of the quantitative

data is presented first. Following this interpretation the qualitative statements are

reported to extend the discussion and represent participants’ interpretations of the

Internet as a promotional tool in their own words.

4.2 Descriptive Statistics

Widely used in survey research, descriptive statistics allow researchers to

summarise patterns of behaviour within a sample and draw comparisons (de Vaus,

1995). Similarly, preliminary descriptive statistics have been useful in this study

to assist in describing the survey data collected from the sample of advertising

agencies and their clients, and in order to measure and report on this data (Howell,

1992). The survey data has been used to categorise information to reveal trends

and patterns in usage of the Internet, perceptions of Internet value and other

marketing factors from both client and agency perspectives (Howell, 1992). The

following sections overview the sample selection and rationale, and presents a

univariate analysis of the survey data collected.

4.2.1 Sample Population

The Internet is a global communications tool. It was therefore important to focus

this study on an international group of advertising agencies and their respective

clients. A well known international advertising agency network and a sample of

their clients were selected as the base for the research sample3. Survey

respondents from this network are representative of the target population of

3 For confidentiality reasons, as outlined in Section 3.7, the name of the agency network has been withheld.


73

advertising industry representatives who fill agency and client positions. At the

time of the study, the international advertising agency network consisted of 206

offices across 96 countries, including advertising agencies and production houses.

The agency network and their clients are professionals in the advertising and

communication industry, who make decisions about integrating the Internet into

IMC strategies. Their participation in the study was suitable, because they had the

relevant experience to represent ‘typical’ agency and client perceptions of the

value of the Internet as a promotional tool.

Descriptive statistics describing two research samples follow. Section 4.3

describes the agency respondents, which is followed by a description of their

client’s use of the Internet in Section 4.4. Preliminary analysis of the agency

sample allows for the assessment and comparison of differences that exist

between advertising agencies on a global scale, in terms of their use of the

Internet as a promotional tool. Furthermore, examining agency respondents more

closely reveals what they believe their clients’ perceive about the value of the

Internet. It was assumed that undertaking this closer inspection of perceptions

would provide greater insight into how valuable advertising agencies and clients

consider the Internet as a promotional tool. The following discussion will describe

agency and client perceptions so as to respond to the first research question:

What are the differences between agency and client perceptions of the

value of the Internet as a promotional tool?

As Reeves and Nass (1996, p. 253) note, “perceptions are far more influential

than reality defined more objectively.” The following section thus reveals

perceptions about the Internet’s value, which currently influence agency-client

relationships in the advertising industry.

4.2.2 Sample Descriptions

Due to language barriers, it was expected that a response rate of 100% would not

be possible in this research. Nevertheless the call to participate in the research was

expanded to include all contactable agencies (and their respective clients) within


74

the international network. Using snowball sampling, a total of 140 advertising

agencies were selected from the international agency network. As a result, survey

responses were received from advertising agencies and clients in the following

regions of the world: Australasia, European Union, Middle East and Africa,

United States of America, Latin America and Canada (see Appendix L). Table 4.1

provides a brief overview of those advertising agencies that received and

responded to the survey questionnaire; those agencies that were sent the survey

questionnaire but did not respond; and those agencies within the international

network that were not included from the survey sample.

Table 4.1: Summary of agencies from international network

available to consider in survey sample

Agencies who completed survey questionnaire = 65

Agencies who did not respond = 42

Agencies not included in / removed from survey sample = 33

TOTAL AGENCIES TO CONSIDER IN SAMPLE: 140

From snowball sampling, 65 agencies completed and submitted the agency

questionnaire, achieving a response rate of 46.4%. A total of 42 agencies that

were sent the survey questionnaire did not respond, reply to the email request or

complete the survey questionnaire. Another four agencies were removed from the

survey sample for the following reasons:

• one agency declined to participate;

• one agency resigned to participate due to their country being in turmoil;

• another agency was no longer part of the international network; and

• the final agency had changed their operations to be a public relations

company, as opposed to a full service advertising agency.

A further 29 agencies that were listed in the international agency network were

not included in this survey sample as their offices were not contactable via email

or facsimile. As these agencies did not have email contact, this suggested at the

time that these agencies were not using the Internet for their advertising functions

and therefore were not of interest to this study.


75

To gain a clearer profile of the agency sizes within this international agency

network, the agency questionnaire was framed asking questions relating to the

number of client accounts the agency services and approximately what proportion

of the agency’s billings could be attributed to their top three billing client

accounts. Preliminary analysis of this data reveals the majority of agency

respondents (50.8%) currently have 20 or more client accounts; 30.8% of agencies

state that they have between 10 and 19 client accounts and only 18.5% of agencies

indicate that they have less than 10 client accounts (see Table 4.2). The sample of

agency and client respondents provided a cross-section from the international

network of advertising industry representatives. Findings from this study can

therefore adequately respond to the study’s aim, which was to examine agency-

client relationships.

Table 4.2: Number of client accounts held by agencies

Number of client

accounts (Q45A) Frequency

Valid

Percent

Cumulative

Percent

Valid < 10

10 – 19

20 +

Total

12

20

33

65

18.5

30.8

50.8

100.0

18.5

49.2

100.0

In terms of billings derived from the agency’s top three clients the agency survey

data reveals that two thirds of all agency respondents indicate that between 20%

and 60% of their agency billings are derived from their top three billing clients

(see Table 4.3, following page). An agency’s top billing clients have an important

role to play in the agency family. Usually such clients have a long-term

relationship with the agency and utilise a majority, if not all of the agency’s

service offerings. In order to measure agency and client perceptions of the value

of the Internet as a promotional tool, each agency’s top three billing clients were

included in the survey research this sample is discussed in detail Section 4.4.


76

Table 4.3: Analysis of the proportion of agency billings derived

from the agency’s top three billing client accounts

Proportion of agency

billings derived from top

three billing clients? (Q47A)

Frequency Valid

Percent

Cumulative

Percent

Valid < 20% 20 – 39% 40 – 59% 60 – 79% 80% + Total

Missing

10 20 20 5 5 60 5

16.7 33.3 33.3 8.3 8.3

100.0

16.7 50.0 83.3 91.7 100.0

4.3 Description of Agencies’ Use and Opinions of the

Internet

To gauge agency and client perceptions of the value of the Internet as a

promotional tool, it was firstly important to ascertain how many clients within the

agency sample actually advertise on the Internet. A substantial 78.5% (n=51) of

the agency sample indicated that they had clients who advertise on the Internet.

To quantify the magnitude of clients actively using the Internet as a promotional

tool, the agency questionnaire asked what percentage of clients advertise on the

Internet. Frequency analysis revealed that currently only 27.9% of agencies in the

sample have between 21% and 30% of their clients that advertise on the Internet

(see Table 4.4, following page). Only one agency reported that none of their

clients advertise on the Internet, while approximately 70% of agencies responded

that less than 31% of their clients advertise on the Internet. This finding is

indicative of the innovativeness and current use of the Internet within the



77

Table 4.4: Agency responses relative to the percentage of

clients who advertise on the Internet

What percentage of your

clients advertise on the

Internet? (28A)

Frequency Valid

Percent

Cumulative

Percent

Valid 0% 1 – 10% 11 – 20% 21 – 30%

31 – 40% 41 – 50% 51 – 60% 61 – 70% 71 – 80% 81 – 90% 91% + Total Missing

1 9 8 12

3 3 1 1 2 2 1 43 8

2.3 20.9 18.6 27.9

7.0 7.0 2.3 2.3 4.7 4.7 2.3

100.0

2.3 23.3 41.9 69.8

76.7 83.7 86.0 88.4 93.0 97.7 100.0

While some clients (a minority) appear to be actively using the Internet as a

promotional tool, it is of value to understand whether agencies perceive the

adoption of the Internet as more suitable to specific industry sectors. Knowledge

such as this, would enable agencies firstly to market online services to existing

clients within these industries and secondly, to identify potential online clients

from these specific industry sectors. Agency respondents were asked to indicate

which industries they felt were most suited to using Internet advertising. The

selection of industries (see Figure 4.1 or Appendix M for data tables) included

were biased towards B2C industry, because current e-commerce development is

heavily situated in the B2C sector, rather than the industrial sector. This is

because the Internet facilitates consumer search, view, information downloading

and online shopping. Inspection of Figure 4.1 (see following page) highlights that

B2C industries were selected by respondents as most suitable for Internet

advertising over the B2B sector.


78

0

1020

3040

50

6070

8090

100

Banking and finance

Entertainment

Tourism and travel

Information tech./software

Telecommunications

Hi-technology goods

Educational services

Public sector (Government)

Transportation

Durable consumer goods

Hospitality

Medical

Food and beverage

Personal services

Mechanical and trade

Construction

Engineering

Agricultural

Forestry

Figure 4.1 Analysis of industries agencies feel most suitable for Internet

advertising

Also of interest in this investigation was establishing whether agency respondents

had recently pitched Internet advertising to any of their clients, and which

industry sector these clients came from. Nearly half of the advertising agencies

(n=65) within the sample (49.2%, n=31) state that they have recently pitched

Internet advertising to their clients (see Appendix N). The top five most common

industry sectors agencies pitched Internet advertising to were: banking and

financial services; telecommunications products and services; information

technology and software products; entertainment; and food and beverage.

4.3.1 Agency Provision of Internet Advertising Services

Approximately two-thirds of the agency sample (67.7%: n=44) provide Internet

advertising services to their clients. A closer examination of the remaining 32.3%

(n=21) of agencies who do not provide Internet advertising services, reveals that

several of these agencies have clients who do advertise on the Internet. This

finding outlines an important opportunity for advertising agencies who are not

currently providing Internet advertising services, to include these services in their

offering in order to support their clients’ existing Internet communication needs.


79

Interestingly, 78.5% (n=51) of respondents indicate that they have clients that

currently use Internet advertising (see Table 4.5, below). Critically, twenty-one of

these agencies indicated that they did not provide Internet advertising services

directly to their clients. This means that these clients were using Internet services

from alternative providers (these agencies are located in the following regions:

Austria; Bangkok, Thailand; Bern, Switzerland; Budapest, Hungary; Hamburg,

Germany; Honduras; Lithuania; London, United Kingdom; Melbourne, Australia;

New York, USA; Portugal; Republic of Panama; and Venezuela). Importantly,

three of these twenty-one agencies indicate that they have recently pitched

Internet advertising to their clients (London, Venezuela and Panama). In order to

ensure a healthy agency-client relationship and client satisfaction, these twenty-

one agencies should review their service offering to their clients that use the

Internet as a promotional tool and seek out opportunities to pitch Internet

advertising to these clients.

Table 4.5: Analysis of agencies who responded that they

have clients who advertise on the Internet

27. Do any of your clients

advertise on the Internet?

(Q27A)

Frequency Valid

Percent

Cumulative

Percent

Valid Yes No Total

51 14 65

78.5 21.5 100.0

78.5 100.0

Turning to a closer examination of the agencies that currently provide Internet

services (n=44), frequency analysis of Internet service provision highlights that

the majority of these agencies (77.3%: n=34) provide their clients with general

Internet advertising services (e.g. brochure ware, banner ads, etc.). In addition,

approximately 60% (n=26) of agencies provide their clients with marketing

services relative to the Internet (see Figure 4.2, following page). Very few of the

agencies in the sample provide their clients with Internet based public relations

(18.2%) or personal selling services (15.9%). Although a very high proportion

(86.4%) of the agencies that provide their clients with Internet advertising services

provide web site design services, less than half of the agencies (45.5%) provide


80

web site maintenance services and just over half of these agencies provide their

clients with web media planning services (52.3%). The data therefore indicates

that most agencies who provide Internet advertising services to their clients,

commonly provide general advertising and marketing services and that they are

more likely to provide web site design and web media planning services, over web

site maintenance services. At this point in time, it appears that agencies are not

offering clients’ public relations and personal selling services that leverage the

Internet (see Appendix O).

Figure 4.2 Agency responses relative to the specific Internet services

the agency provides

0102030405060708090

100

General Advertising

Marketing

Public Relations

Web Site Design

Web Site Maintenance

Web Media Planning

Personal Selling

Other

Data collected from this sample reveals an interesting point about agencies in this

network. Which is that whilst the literature highlights growth rates for the

adoption of the Internet have been dynamic and rapid over the past five to ten

years, advertising agencies within this international network have only recently

started to provide Internet advertising services to their clients. The following

section reviews agency feedback in relation to the time period that advertising

agencies have been providing Internet advertising services to their clients.


81

Significantly, only one advertising agency within this international network

indicated that they had been providing Internet services for five years or more.

The largest proportion of agencies stated that they had been providing Internet

advertising services for between one year and less than two years (26.7%: n=12)

(see Table 4.6 below) and a further 22.2% (n=10) indicated that they have only

been providing Internet services to clients in the last six months. This finding

indicates that agencies are responding to their client’s new media requirements

and possibly identifying a new service function that clients may currently be using

external Internet specialists to provide.

Table 4.6: Agency responses relative to time period for provision

of Internet advertising services

How long has your agency been

providing Internet advertising

services? (Q33A)

Frequency Valid

Percent

Cumulative

Percent

Valid < 6 months 6 months – 1 year 1 year < 2 years 2 years < 3 years 3 years < 5 years 5 years + Total Missing Total

10 8 12 7 7 1 45 20 65

22.2 17.8 26.7 15.6 15.6 2.2

100.0

22.2 40.0 66.7 82.2 97.8 100.0

4.3.2 Agency Value Perceptions of the Internet

Of vital interest to this research study is whether a parallel can be drawn between the

supply of Internet advertising services by an advertising agency, when more than one of

their top three billing clients advertises on the Internet. The agency questionnaire results

reveal that 94.1% (n=48) of agencies who respond that they have clients who advertise on

the Internet, indicate that at least one of their top three billing clients advertise on the

Internet (see Table 4.7, following page).


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Table 4.7 Agency responses relative to the number of their top

three billing clients who advertise on the Internet

Do any of your agency’s top three

billing clients advertise on the

Internet? (Q29A)

Frequency Valid

Percent

Cumulative

Percent

Valid One of these clients Two of these clients All three of these clients None of these clients Sub Total Missing Total

16 17 15 3 51 14 65

31.4 33.3 29.4 5.9

100.0

31.4 64.7 94.1 100.0

In support of the fact that the utilisation and provision of Internet advertising

services is still relatively new to the advertising industry, it appears from the

survey data that very few advertising agencies can attribute more than 10% of

their agency billings to Internet advertising. Of all agency respondents 44.8%

(n=13) report that between 1-10% of their agency billings can be attributed to

Internet advertising (see Table 4.8, below), while only one agency reports higher

than 30% of their agency billings are generated from Internet advertising.

Table 4.8 Agency responses relative to agency billings

attributed to Internet advertising

What % of your agency

billings can be attributed to

Internet advertising? (Q32A)

Frequency

Valid

Percent

Cumulative

Percent

Valid 0% 1 – 10% 11 – 20% 31 – 40% Sub Total Missing Total

11 13 4 1 29 16 45

37.9 44.8 13.8 3.4

100.0

37.9 82.8 96.6 100.0

In assessing client and agency perceptions of the value of the Internet as a

promotional tool, the agency questionnaire asks agencies whether they perceive

the Internet to add value to their clients’ existing promotional mix. All agency


83

respondents from the international network involved in this study indicated that

they perceived the Internet can add value to their clients’ existing promotional

mix (see Table 4.9).

Table 4.9 Analysis of agency perceptions of Internet

value

Does your agency perceive that

the Internet can add value to your

client’s existing promotional mix?

(Q36A)

Frequency Valid

Percent

Valid Yes Missing Total

64 1 65

100.0

A very high proportion of agencies (81.3%) indicate that they believe their clients

also perceive the Internet to be a valuable promotional tool (see Table 4.10,

below). This is a promising statistic for advertising agencies, firstly in assisting

the prevention of gaps from occurring between client and agency expectations of

the Internet as a promotional tool; and secondly for the agency to be able to utilise

a new revenue stream enhancing their service offering to the agency’s existing

and potential client base.

Table 4.10 Analysis of agency understanding of their

clients’ perception of Internet value

Do your clients perceive the

Internet to be a valuable

promotional tool? (Q37A) Frequency

Valid

Percent

Valid Yes Missing Total

64 1 65

100.0

An analysis of the agency data reveals that 51.9% (n=28) of agency respondents

indicate that less than 25% of their clients perceive the Internet to be a valuable

promotional tool. Approximately, 20% (n=10) of agency respondents indicate

between 50% and 74% of their clients perceive the Internet to be a valuable

promotional tool (see Table 4.11, following page). The survey data also reveals

over half of the agency respondents believe their clients value the Internet as a


84

promotional tool, and that this expectation was equal to their agency’s

expectations - this is an interesting discovery in relation to minimising ‘gaps’

between agency-client expectations. Only one agency within the survey group

states that they feel their client’s perception of the value of the Internet as a

promotional tool is actually greater than the agency’s expectation. This agency

was located in Brazil and the agency’s top three billing clients were in the

following industries: alcoholic and soft drink beverages, banking and finance and

telecommunications.

This section has described one side of the B2B relationship being explored in this

study - an agency perspective on the Internet as a promotional tool. The next

section now turns to a description of clients’ expectations of the Internet as a

promotional tool. Following this discussion, the chapter will then turn to a closer

examination of the agency-client relationship.

Table 4.11 Agency responses relative to the percentage of clients

who perceive the Internet as a valuable promotional

tool

What (%) of clients do you

estimate perceive the Internet

as a valuable promotional tool?

(Q38A)

Frequency Valid

Percent

Cumulative

Percent

Valid Missing

< 25% 25 – 49% 50 – 74% 75% + Sub Total 99 Total

28 7 10 9 54 11 65

51.9 13.0 18.5 16.7 100.0

51.9 64.8 83.3 100.0

4.4 Description of Clients’ Use and Opinion of the

Internet

Following agency questionnaire submissions (n=65), snowball sampling

continued to recruit client respondents. A total of 101 clients were contacted to

complete the client questionnaire. The total population of clients who could have


85

been invited to participate in the survey was 195. However, only half of all agency

respondents provided client contact details for one or more of their top three

billing clients. The client sample constituted 101 client contacts provided by 28

agencies. 58 clients completed and submitted the client questionnaire, achieving a

response rate of 57.4%. The other 43 participants either did not respond to the

email ‘call to participate’ in the client survey, or they were not contactable via the

email address or other contact details supplied by the agency (see Table 4.12).

Table 4.12 Summary of agency and client surveys received

Agencies who provided client contact details = 34

Agencies who did not provide client contact details = 31

Total number of client contacts obtained = 101

Total number of completed client surveys = 58

Total number of clients who did not respond = 43

To evaluate agency-client relationships and later assess service expectations and

perceptions of the value of the Internet as a promotional tool, the time period of

clients working with their partner advertising agency was measured. An analysis

of client survey data reveals that more than half of the clients (58.6%: n=34)

within the network, who participated in this study (n=58), have been working with

their current advertising agency for a period of more than three years (see Table

4.13, following page). Within the client sample 36.2% (n=21) of clients indicated

that they have been working with their current advertising agency for a period of

more than five years. This lengthy time period suggests enduring agency-client

relationships were prevalent within the agency and client sample involved in the

study.


86

Table 4.13 Analysis of time period clients have been with current

advertising agency

How long has your company been

working with your current advertising

agency? (Q38C)

Frequency Valid

Percent

Cumulative

Percent

Valid < 6 months 6 months – 1 year 1 year < 2 years 2 years < 3 years 3 years < 5 years 5 years + Total

5 4 9 6 13 21 58

8.6 6.9 15.5 10.3 22.4 36.2 100.0

8.6 15.5 31.0 41.4 63.8 100.0

After reviewing agency data relative to the number of clients who advertise on the

Internet, client survey respondents were asked whether their company uses the

Internet to promote or sell their products or services. An analysis of the client

survey data reveals that approximately 80% (n=46) of the clients surveyed use the

Internet to promote and/or sell their products or services (see Table 4.14).

Table 4.14 Analysis of clients who use the Internet to

promote or sell their products/services

Does your company use the

Internet to promote and/or sell

your products or services? (Q27C)

Frequency Valid

Percent

Valid Yes No Total

46 12 58

79.3 20.7 100.0

The majority of client respondents (37%) who indicate that they use the Internet

to promote and/or sell their products or services, also indicated that they have

been using the Internet for a period of less than six months (see Table 4.15,

following page). This research finding supports the slow uptake and provision of

Internet services by the international network of advertising agencies as analysed

in this study. Very few clients revealed that they have been online for more than

five years (4.3%: n=2) and a further 21.7% (n=10) stated they have been using the

Internet between one and two years.


87

Table 4.15 Analysis of time periods those clients who use the

Internet have been online

How long has your product/

service been online? (Q33C) Frequency

Valid

Percent

Cumulative

Percent

Valid < 6 months 6 months – 1 year 1 year < 2 years 2 years < 3 years 3 years < 5 years 5 years + Sub Total Missing Total

17 6 10 8 3 2 46 12 58

37.0 13.0 21.7 17.4 6.5 4.3

100.0

37.0 50.0 71.7 89.1 95.7 100.0

While client use of the Internet appears to be quite slow, the various forms of the

Internet utilised by clients is also of interest in this research study. Client

respondents (n=58) demonstrate considerable experience with the functionalities

of the Internet (see Figure 4.3 and Appendix P for raw data). The most common

forms of Internet usage reported in the client sample included:

• World Wide Web (WWW) - (100%: n=46);

• email (60.9%: n=28);

• mailing lists (26.1%: n=12); and

• newsgroups (21.7%: n=10).

The least used forms of online communication used by clients to promote and/or

sell products are Internet relay chat (8.7%: n=4) and discussion groups (6.5%:

n=3).


88

0

10

20

30

40

50

60

70

80

90

100

World Wide Web

(WWW)

E-mail Internet relay chat Newsgroups Mailing Lists Discussion Groups

Figure 4.3 Analysis of the forms of the Internet utilised by client

companies

4.4.1 Provision and Management of Internet Services

Over half of the participants in the client sample (69%: n=40) reported that they

used Internet advertising services and less than 35% (n=20) of clients responded

that they used telemarketing activities. When asked whether their advertising

agency provides general advertising services as expected 100% of clients respond

that their agency provides their general advertising function. However, only

29.8% (n=17) of clients respond that their advertising agency performs their

Internet advertising function. This finding identifies an opportunity for agencies to

increase/provide Internet advertising services to clients currently using the

Internet as a promotional tool.

Aside from the actual provision of Internet services, an understanding of who

performs the role of developing and maintaining a client’s Internet presence is of

great interest to this study. The responsibility for the development and

maintenance of a client’s Internet site is reviewed in the following section. Client

respondents were asked to indicate who was responsible for the development and

maintenance of their Internet presence (see Table 4.16, following page). Client

survey respondents indicated that approximately one-third (32.6%) used their


89

advertising agency’s services to develop their Internet sites or advertising

activities, compared with 41.3% (n=19) who used external suppliers (e.g., Internet

advertising specialists and graphic design houses). Based on this data, it can be

proposed that external providers are encroaching on the agency territory and that a

trend appears to be emerging with clients taking their Internet functions in house

(26.1%: n=12).

Table 4.16 Analysis of client responses with regard to the responsibilities for

developing and maintaining the client’s Internet site or advertising

Develops Internet Site or

Advertising (Q29C)

Maintains Internet Site or

Advertising (Q30C)

Frequency Valid

Percent

Cumul.

Percent Frequency

Valid

Percent

Cumul.

Percent

Valid Your corporate ad agency Internet Advertising Specialist Graphic Design House In House Total Missing

15

13 6 12 46 12

32.6

28.3 13.0 26.1 100.0

32.6

60.9

73.9

100.0

10

10 1 16 37 21

27.0

27.0 2.7 43.2 100.0

27.0

54.1

56.8

100.0

In relation to the maintenance of the clients’ Internet site or Internet advertising

activities, a high percentage of agency clients (43.2%: n=16) indicate that they are

actually fulfilling this function internally, with a similar proportion of clients

(27%: n=10) responding that they use their advertising agency or an Internet

advertising specialist to maintain their Internet presence. Graphic design houses

also appear to be picking up a small percentage (2.7%) of the client groups’

business.

Comparing the proportion of clients who indicate that their advertising agency

either develops or maintains their Internet presence, to the proportion of clients

who use external Internet suppliers or in house functions, reveals that advertising

agencies have significant competition in Internet advertising service provision. On

the other hand, a great opportunity exists for advertising agencies to offer and

promote Internet advertising services to their existing clients, because these

services are currently provided by external agencies. As a result, advertising


90

agencies could increase their bottom line profit by offering Internet services to

their client base.

4.4.2 Clients’ Value Perceptions of the Internet

An analysis of the client survey data reveals 22.2% (n=10) of clients indicate that

their Internet advertising efforts have contributed to their sales (see Appendix Q).

Of those that indicated they had achieved sales (n=10), 60% stated that their

Internet advertising resulted 10% of sales. One client in Mexico however,

indicates that over 90% of their sales can be attributed to their Internet advertising

efforts and this was primarily due to the fact that this client was a direct sales

company who uses the Internet as their primary sales and distribution medium.

To ascertain whether gaps exist between client and agency perceptions of the

value of the Internet as a promotional tool, client respondents were asked whether

their company perceives the Internet as adding value to their existing promotional

mix. While gaps between client and agency perceptions were expected, in actual

fact a very high proportion (91.1%) of clients were found to perceive the Internet

as adding value to their existing promotional mix (see Table 4.17).

Table 4.17 Analysis of client perceptions of Internet value

Does your company perceive the

Internet can add value to your

existing promotional mix? (Q35C)

Frequency Valid

Percent

Valid Yes No Total Missing

51 5 56 2

91.1 8.9

100.0

The majority of clients participating in the study (80%: n=58) indicated that they

believe their company’s advertising agency perceives the Internet to be a valuable

promotional tool. On the other hand, 20% felt that their company’s advertising

agency did not think the Internet to be a valuable promotional tool (see Table

4.18, following page). The preliminary data analysis overviewed in these sections

indicates that there are not substantial gaps between agencies’ and their clients’


91

perceptions regarding the value of the Internet as a promotional tool. The next

section continues this investigation using bivariant analysis techniques to explore

further associations between the variables used in the research.

Table 4.18 Analysis of client understanding of their

agency’s perception of the value of the Internet

Does your company’s advertising

agency perceive the Internet to be a

valuable promotional tool? (Q36C)

Frequency Valid

Percent

Valid Yes No Total Missing

44 11 55 3

80.0 20.0 100.0

4.5 Relationship Analysis of Agency-Client Perceptions

A major assumption that informed the research design used in this study was that

advertising agencies perceive the Internet to be a significantly more valuable

promotional tool than their clients. It is expected that significant differences

would exist between the perceptions of the value of the Internet as a promotional

tool, as held by clients and advertising agencies. The following analysis is

undertaken to respond to the second research question in the study, which is:

What are the differences between agency and client expectations of the

value of Internet as a promotional tool?

In order to test whether gaps or differences exist between client and agency

expectations, the variables of service expectation were tested using a series of

bivariate analysis. In each test the independent variable was the type of

respondent (agency or client) and the dependent variable was one of a number of

measures of expectations of the Internet as held by these respondents. In the case

of this study, bivariate analysis assists in describing the differences between these

two groups (agencies and clients).


92

4.5.1 Provision and Utilisation of Internet Services

It is proposed that clients who are using the Internet to promote or sell their

products or services will have advertising agencies that can fulfil their Internet

advertising requirements. Of primary interest to this research study is whether the

proportion of clients using the Internet matches the proportion of agencies

providing Internet advertising services. The agency and client survey data was

cross-tabulated to examine this question. The client Internet use question (see

Appendix B: Q27C) was cross-tabulated against the agency provision of Internet

advertising services question (see Appendix A: Q30A). While no statistically

significant evidence was found [χ2 (1) = 1.018, p>0.05] there are several findings

of interest with regard to client use and agency supply of Internet advertising

services, which include:

• of those clients who do use the Internet as a promotional tool

approximately one third (34.1%: n=15) have advertising agencies who do

not provide Internet advertising services to their clients, while two thirds

(65.9%: n=29) do provide such services (see Table 4.19, following page);

• of those clients who do not use the Internet as a promotional tool, 50.0%

(n=6) of their advertising agencies provide Internet advertising services;

and

• of those advertising agencies that do provide Internet advertising services

82.9% (n=29) have clients who use the Internet as a promotional tool,

while only 17.1% (n=6) of clients do not use the Internet as a promotional

tool.


93

Table 4.19 Does the agency provide Internet advertising services cross-

tabulated with whether the client uses the Internet to

promote/sell your products/services

Does your company use the

Internet to promote/sell your

products/services? (Q27C)

Yes No Total

Does your agency provide Internet advertising services?

(Q30A)

Yes Count

% within ‘Does your agency provide Internet advertising services?’

% within ‘Does your company use Internet to promote/sell services?’

% of Total

29

82.9%

65.9%

51.8%

6

17.1%

50.0%

10.7%

35

100.0%

62.5%

62.5%

No Count



% of Total

15

71.4%

34.1%

26.8%

6

28.6%

50.0%

10.7%

21

100.0%

100.0%

100.0%

Total Count



% of Total

44

78.6%

100.0%

78.6%

12

21.4%

100.0%

21.4%

56

100.0%

100.0%

100,0%

The preceding section has described agency and client use of the Internet, the

provision and use of Internet advertising services and agency and client

perceptions of the value of the Internet as a promotional tool. The following

section reviews the service expectations scale and the SERVQUAL model as a

starting point for factor analysis.

4.6 Factor Analysis

The following section discusses the analysis of the survey responses from the

Internet service expectations section of both the agency and client questionnaires.

The objective of this analysis is to further explore the agency-client relationship

by looking more closely at the influence of service expectations on Internet value

perceptions. This objective is tested by ascertaining whether gaps exist between

agency and client perceptions across a series of SERVQUAL items: tangibles,

reliability, responsiveness, assurance, empathy.


94

Independent t-tests were conducted to examine the existence of perceptual gaps.

Independent samples t-tests are used in this research study to measure whether

significant differences exist between agency and client perceptions of the

importance of those items stated in the first 26 agency and client survey questions

(Internet service expectations) based on the modified SERVQUAL model.

4.6.1 Reliability Analysis

As discussed in Chapter Three, the Internet service expectations section of both

questionnaires is a modified version of the SERVQUAL model designed to

compare service expectations and service perceptions (Parasuraman et al., 1988,

1991). Before analysing the results from the Internet service expectations section,

the five modified SERVQUAL constructs were tested for reliability, using

Cronbach alphas no lower than .50. Although Nunnally (1967) recommends using

Cronbach alphas of .70 and above for exploratory studies like this one, lower

reliabilities to .50 are considered acceptable (Laroche and Parsa, 2000; Walker,

Craig-Lees, Hecker and Kent, 2000). Four of the five components from the

modified SERVQUAL model were found to be reliable (see Table 4.20, following

page). The ‘empathy’ construct was found to be unreliable. On this basis, the

items for each of the four reliable SERVQUAL components have been averaged

to form a composite score.


95

Table 4.20 Reliability analysis of the five

SERVQUAL components

COMPONENTS CLIENT AGENCY

Tangibles α = 0.718

n = 37

α = 0.742

n = 51

Reliability α = 0.820

n = 44

α = 0.763

n = 51

Responsiveness α = 0.650

n = 52

α = 0.685

n = 56

Assurance α = 0.728

n = 47

α = 0.689

n = 57

Empathy* αααα = 0.589

n = 53

αααα = 0.523

n = 60

* ‘Empathy’ was found not to be a reliable component.

The four SERVQUAL components found to be reliable in this scale have been

tested using an Independent t-test; t-tests are calculated using sample size and a

comparison between two means. In this study, t-tests were used to test whether

any significant differences exist between the means for the client and agency

responses on these four reliable components, by calculating a ‘t’ statistic

(Ticehurst and Veal, 1999). Analysis of the Independent t-tests computed on the

four reliable components of the modified SERVQUAL model (see Table 4.21,

following page) reveals no significant differences between the client and agency

responses within these components: tangibles, reliability, responsiveness and

assurance (see Table 4.22, following page).


96

Table 4.21 Independent Samples t-tests – Equal variances

assumed Modified SERVQUAL components

t-test for Equality of Means MODIFIED SERVQUAL

MODEL RELIABLE

COMPONENTS Means t df

Sig.

(2-tailed)

TANGIBLE 3.19 -1.26 86 .21

RELIABILITY 3.57 .12 93 .91

RESPONSIVENESS 3.54 .14 106 .89

ASSURANCE 3.46 -.44 102 .66

Table 4.22 Reporting of group means

N Mean

Std.

Deviation

Tangibles Client 58 3.1149 .52306

Agency 63 3.2778 .45373

Total 121 3.1997 .49295

Reliabilty Client 58 3.5960 .37366

Agency 63 3.5614 .33770

Total 121 3.5780 .35432

Responsive Client 58 3.5115 .43776

Agency 63 3.4762 .43001

Total 121 3.4931 .43229

Assurance Client 58 3.4420 .38983

Agency 63 3.4601 .39066

Total 121 3.4514 .38874

Empathy Client 58 3.6457 .32623

Agency 63 3.5413 .32298

Total 121 3.5913 .32741

In fact, agencies and their clients appear to share similar perceptions concerning

the value of the Internet as a promotional tool. This outcome can be attributed to

several factors. First, the Internet is a dynamic medium that has grown in

understanding and adoption over the past decade. The general public and business

sector have become more experienced in using PCs and the Internet, thus adoption

rates of Internet usage have continued to grow dramatically. During the survey

period for this research study however, it appears that client expectations of the

value of the Internet as a promotional tool may have grown in importance, to

more closely parallel agency expectations. Potentially, this development has


97

resulted from increased experience and acceptance of the Internet as a reliable and

valuable marketing tool.

As a result of the low reliability of the ‘empathy’ construct in the modified

SERVQUAL model used in this study, each individual question within this

component (Questions 2, 16, 8, 13 and 5) has been computed using a t-test. This

was undertaken to ascertain whether there are any perceptual differences between

client and agency responses. From the t-test run on the five questions within the

‘empathy’ construct (see Table 4.23, below), there is a statistically significant

difference between agency and client perceptions on one of these empathy

questions [t = 2.285 (117), p < 0.05]. Results indicate that clients place a higher

level of importance on their agency’s understanding of their specific Internet

needs, than their agencies have indicated. Apart from this statistical significance,

the other four empathy questions reveal similarities in the perception of value

between both clients and their agencies.

Table 4.23 Independent Samples t-tests – Equal variances

assumed Individual Empathy Component question

items

t-test for Equality of Means

EMPATHY COMPONENT Means t df

Sig

(2-tailed)

Q #2: Excellent advertising agencies will give customers individual attention.

3.89 .34 118 .73

Q #16: Excellent advertising agencies will have operating hours convenient to all their clients.

3.22 1.12 115 .23

Q #8: Excellent advertising agencies will have account representatives who give clients personal attention.

3.79 .20 117 .84

Q #13: Excellent advertising agencies will have their client’s best interests at heart.

3.66 .38 119 .70

Q #5: The account representatives of excellent advertising agencies will understand their client’s specific needs with regard to advertising on the Internet.

3.65 2.29 117 .024


98

Following the reliability analysis of the modified SERVQUAL instrument and the

statistical tests on the empathy construct, t-tests were calculated on the client and

agency results obtained from all individual 26 questions composing the Internet

service expectations section. In general, this analysis reveals that client and

agency responses relating to agency services, relationships and an understanding

of the Internet are closely paralleled. For the advertising industry sample, there are

very few gaps between agencies and their clients’ perceptions regarding Internet

advertising services. However, three survey questions revealed statistical

differences between agencies and their clients on the following SERVQUAL

dimensions: empathy (Question 5) - discussed previously; assurance (Question 9);

and tangibles (Question 10).

Agencies place more importance on creating and developing assurance in clients.

Specifically, agencies felt that being consistently courteous during agency-client

exchanges was more important [t = -2.026 (98.658), p < 0.05]. This is to be

expected (see Table 4.24, below), because being courteous time and again inspires

trust and confidence in clients (Parasuman et al, 1988). Additionally, this

sentiment reinforced an agency’s belief in the importance of providing clients

with excellent service.

Table 4.24 Reporting of group means

N Mean

Std.

Deviation

Individual attention (q2) Client 57 3.89 .310

Agency 63 3.87 .381

Total 120 3.88 .347

Understand needs (q5) Client 57 3.65 .582

Agency 62 3.39 .662

Total 119 3.51 .636

Personal Attention (q8) Client 57 3.79 .411

Agency 62 3.77 .422

Total 119 3.78 .415

Best Interests (q13) Client 58 3.66 .548

Agency 63 3.62 .490

Total 121 3.64 .516

Operating Hours (q16) Client 55 3.22 .686

Agency 62 3.06 .698

Total 117 3.14 .694


99

Agencies and their clients also illustrate differences in regards to the physical

facilities of an advertising agency, as being visually appealing (Question 10, a

‘tangible’ component) [t = -3.568 (103.401), p < 0.05]. The physical attributes of

a business can represent important subliminal qualities, especially in an aesthetic

industry such as advertising. It is therefore expected that physical attributes would

be more important to an agency. Whereas client expectations are more concerned

about the quality of the actual service provided through the physical equipment.

As a result clients do not think the physical appearance of an advertising agency is

as important as it is perceived to be by their advertising agencies (see Table 4.25,

below).

Table 4.25 ANOVA of client / agency expectations

Sum of

Squares df

Mean

Square F Sig.

Tangibles Between Groups .801 1 .801 3.360 .069

Within Groups 28.359 119 .238

Total 29.159 120

Reliability Between Groups .036 1 .036 .286 .594


Total 15.065 120

Responsive Between Groups .038 1 .038 .200 .655


Total 22.425 120

Assurance Between Groups .010 1 .010 .065 .799


Total 18.134 120

Empathy Between Groups .329 1 .329 3.126 .080


Total 12.863 120

Two additional questions used to explore SERVQUAL dimensionality reveal

differences between agencies and their clients. These differences are not as

statistically significant (90% level of confidence), however, they contribute a

further understanding of the agency-client relationship involving Internet

advertising service expectations (see Table 4.26, following page).


100

Table 4.26 t-tests results on Questions 12 and 24, significant at <0.1 level

Independent Samples Test - Equal variances assumed

SIGNIFICANT AT 0.1 LEVEL Mean

Difference t df

Sig

(2-tailed)

Q #12

Account representatives of excellent

advertising agencies will have the

knowledge to answer client

questions with regard to Internet

advertising and promotional

activities.

.23 1.91 118 .059

Q #24

The behaviour of account

representatives of excellent

advertising agencies will instil

confidence in clients.

-.18 -1.93 105.81 .056

At a significance level of 0.1 it has been found that clients place a higher

importance on the value of advertising agencies having representatives who are

knowledgeable to answer questions on Internet advertising and promotional

activities; whereas agencies place a higher importance on the value of agency

representatives who instil confidence in their clients. Both of these factors inform

the ‘assurance’ dimension of the modified SERVQUAL model. As discussed,

although it is not possible to prove statistically significant differences exist across

all modified SERVQUAL model components, there are several individual items

within the Internet service expectations section of the questionnaires on which

there are statistically significant differences between client and agency

perceptions of value.

4.7 Hypotheses Testing

Inferential statistics allow marketing researchers to make suggestions or draw

conclusions from a sample to the population of respondents (Neuman, 1994).

Such statistics infer that the patterns of behaviour exhibited by a sample, are likely

to be the same in the greater population from which the sample was drawn (de

Vaus, 1995). In inferential statistics probability theory is utilised in order to test

hypotheses formally (Neuman, 1994). Firstly, hypothesis testing involves

predictions being developed from a review and understanding of relevant theory


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(see Chapter Two), and then data being collected and interpreted based on an

understanding of the theory in order to test a hypothesis (de Vaus, 1995).

In order to examine the hypotheses for this research study so as to explore

whether relationships exist between client and agency responses across the

questionnaire items, cross-tabulations of the client and agency survey data were

calculated and analysed using the Chi-Square (χ²) statistic (Aaker, Kumar and

Day, 2001). The Chi-Square statistic allows for the cross-tabulation of two

categorical variables and is used to determine whether any significant relationship

exists between the two variables (Ticehurst and Veal, 1999). The Chi-Square

statistic can be employed as either a test for statistical independence: which tests

whether there are associations between two or more variables in the study; or as a

test of goodness of fit: which tests to reveal whether there are any significant

differences between an observed frequency distribution and a theoretical

distribution (Aaker et al., 2001).

Ticehurst and Veal (1999) state that the Chi-Square statistic compares the

difference between the observed values (values obtained) and the expected values

(the counts that would be expected if the null hypothesis were true), and that the

greater the difference between the observed and expected values contributes to a

greater value of Chi-Square. The Chi-Square statistic does however exhibit

limitations. First, Chi-Square is sensitive to sample size, therefore it can be

difficult to interpret in an absolute sense when calculated from a cross-tabulation

with cells of different sample sizes. Also Chi-Square has no upper bound, which

makes it difficult to ascertain a feel for its value, and furthermore, the Chi-Square

value does not indicate exactly how two variables may be related (Aaker et al.,

2001). When measuring the association between two variables Chi-Square is also

viewed as being flawed, in that even though Chi-Square may reveal an association

or a relationship between two variables, it only provides a weak indication of the

strength of the association (Aaker et al., 2001).


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A further method of statistical analysis utilised in this study to test for any

differences between the client and agency survey data, involves analysing the

average scores or means. Statistical differences can be ascertained by comparing

two means to see whether they are significantly different (Ticehurst and Veal,

1999). A ‘t’ statistic can be calculated by analysing the comparison between two

means (Ticehurst and Veal, 1999). If there is no level of significance at a 5 per

cent level of probability, between the two means, the null hypothesis cannot be

rejected (Ticehurst and Veal, 1999), therefore there is no statistically significant

difference between the group means.

The following hypotheses are examined using statistical analyses of single

agencies within the international agency network group and their corresponding

client/s. Twenty-nine agencies are cross-tabulated with their individual

corresponding clients, which number 58 clients in total. In 11 cases, all three of

the advertising agencies’ clients completed the client survey, whereas in other

cases, only one or two of the clients completed the client survey (see Table 4.27).

Table 4.27: Summary of agency / client paired groups for

analysis

Number of

Agencies

Number of

Clients

Number of agencies with all three completed client surveys 11 33

Number of agencies with two completed client surveys 7 14

Number of agencies with only one completed client survey 11 11

Agencies who advised client details, clients not contactable 7 0

Agencies who did not advise client contact details 29 0

TOTAL SAMPLE SIZES: 65 58

All those advertising agencies who completed the agency questionnaire and who

either did not provide client contact details, or provided client contact details but

none of their clients completed the client survey questionnaire, were not

considered in the following hypotheses.


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4.7.1 Hypothesis 1: Exploring Internet Value Perceptions

At the commencement of this research study it was the view of the researcher that

advertising agencies perceived the Internet to be a significantly more valuable

promotional tool than their clients perceived the value of the Internet. It is

therefore hypothesised that significant differences exist between the perceptions

of the value of the Internet as a promotional tool, as held by clients and

advertising agencies. As pointed out by Parasuraman et al. (1988), considerable

research has been undertaken to explore implications of expectations compared to

perceptions (e.g., Gronroos, 1982). In making the point they highlight that service

quality, as perceived by consumers, stems from a comparison of what customers

feel services should offer (i.e., expectations), with their perceptions of

performance. Dawning from this understanding of perception, the first hypothesis

states:

H1: There will be a significant difference between client and agency

perceptions of the value of the Internet as a promotional tool.

In order to test this hypothesis, a cross-tabulation was conducted of questions

relating to whether the agency perceives the Internet to add value to their clients’

existing promotional mix (Question 36A) and whether the client company

perceives the Internet to add value to their existing promotional mix (Question

35C). However, respondents from the agency and client surveys totally agreed.

Analysis thus found that 100% of advertising agencies agree that their agency

perceives the Internet to add value to their client’s existing promotional mix (see

Table 4.28, following page). As a result of this finding no variation in agency

responses could be used to run a Chi-Square statistical analysis to test the

hypothesis.

Exploring the data further however, it was found that 90.7% of clients also

perceive the Internet to add value to their promotional mix. Although it is not

possible to statistically analyse the difference between client and agency

perceptions of Internet value in general, it was found that both agencies and


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clients within this study perceive the Internet to add value to a client’s

promotional mix.

Table 4.28: Agency perceptions of whether the Internet ‘adds value’

cross-tabulated with client perceptions of whether the

Internet ‘adds value’

Client perceives Internet adds

value (Q35C)

Yes No Total

Agency perceives Internet adds value (Q36A)

Yes Count

% within ‘Agency perceives Internet adds value’

% within ‘Client perceives Internet adds value’

% of Total

49

90.7%

100.0%

90.7%

5

9.3%

100.0%

9.3%

54

100.0%

100.0%

100.0%

Total Count

% within ‘Agency perceives Internet adds value’

% within ‘Client perceives Internet adds value’

% of Total

49

90.7%

100.0%

90.7%

5

9.3%

100.0%

9.3%

54

100.0%

100.0%

100.0%

4.7.2 Hypothesis 2: Examining the Internet Experience

Interactivity has been widely discussed in the advertising industry, because in the

Internet’s new media environment interactivity is expected to influence and

change consumers’ engagement with the advertiser’s message. Generally,

interactivity has been defined using multiple processes, function, and perceptions.

The function of interactivity, which facilitates different styles of communication,

has informed the design of Internet applications such as the WWW, email,

mailing lists and newsgroups. The preceding sections (see Section 4.4) have

described different usage levels of Internet functions in the client sample.

Drawing together clients’ descriptions of their Internet use i.e. non-Internet user;

WWW only user; email-based user; interactive user (i.e. newsgroups, discussion

groups), an interactive categorisation of non-Internet use has been developed to

examine the clients’ Internet experience further (see Appendix R). Four categories

of users were identified including: non users, WWW only users, email based

users, and interactive users of discussion lists and newsgroups. It is expected that

variations in experience of the Internet’s interactive functionality will influence


105

clients’ Internet advertising service expectations. These assumptions inform the

final hypothesis in the study, which is:

H2: The greater a client’s Internet experience, the greater will be their

service expectation of Internet advertising.

Analysis of variance (ANOVA) has been used to measure differences in the

agency-client relationship based on their Internet experience. ANOVA is a useful

inferential statistic, which allows marketing researchers to ascertain whether

independent variables have an effect on dependent variables within a study

(Garson, 1998). ANOVAs are used to identify differences between the means of

groups within a sample (Hopkins, 2000).

Results from this analysis present interesting findings about the influence of

perceptions, as opposed to the experience of using the Internet’s interactive

functionality. Analysis of clients’ responses (n=58) (see Table 4.29, below)

reveals little difference between clients with no Internet experiences, and those

that have used the full functionality of the Internet’s WWW, email-based and

interactive functions (newsgroups and discussion groups). There were no

significant differences between clients with Internet experience and those with no

Internet experiences (see Appendix R).

Table 4.29 A comparison of client's Internet experience and Internet

advertising service expectations

Sum of Squares df Mean Square F Sig.

Tangibles Between Groups .180 3 .060 .210 .889


Total 15.595 57

Reliability Between Groups .165 3 .055 .380 .768


Total 7.959 57

Responsive Between Groups .206 3 .069 .346 .792


Total 10.923 57

Assurance Between Groups .708 3 .236 1.603 .199


Total 8.662 57

Empathy Between Groups .076 3 .025 .230 .875


Total 6.066 57


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To further explore the influence of perceptions on client expectations, a cross-

tabulation was applied to examine relationships between experience with

interactive Internet functions (e.g., interactive scale) and sales achieved from

Internet advertising efforts (see Appendix Q, Q31c). Table 4.30 (see below)

illustrates that clients in the sample who have embraced more interactive

functionality, have also reported greater sales. Furthermore, Chi-Square analysis

indicates that there is a trend towards greater sales when clients employ more

interactive functions in their Internet advertising efforts (see Table 4.31, following

page).

Table 4.30: Relationship between interactivity and clients' sales

achievement

Q31c * Interact Cross-tabulation

Interact

WWW

only

Email-

Based Interactive

Total

Q31c Yes Count 1 4 5 10

% within Q31c 10.0% 40.0% 50.0% 100.0%

% within interact 7.1% 21.1% 41.7% 22.2%

Adjusted Residual -1.6 -.2 1.9

No Count 13 15 7 35

% within Q31c 37.1% 42.9% 20.0% 100.0%

% within interact 92.9% 78.9% 58.3% 77.8%

Adjusted Residual 1.6 .2 -1.9

Total Count 14 19 12 45

% within Q31c 31.1% 42.2% 26.7% 100.0%

% within interact 100.0% 100.0% 100.0% 100.0%


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Table 4.31: Relationship between interactivity and clients' sales

achievement

Chi-Square Tests

Value df

Asyp.

Sig. (2-

sided)

Exact

Sig. (2-

sided)

Exact Sig.

(1-sided)

Point

Probability

Pearson Chi-Square 4.482a 2 .106 .113

Likelihood Ratio 4.611 2 .100 .128

Fisher's Exact Test 4.188 .113

Linear-by-Linear Association 4.313b 1 .038 .059 .032 .022

N of Valid Cases 45

a. 3 cells (50.0%) have expected count less than 5. The minimum expected count is 2.67.

b. The standardised statistic is -2.077.

The preceding sections have outlined the quantitative analysis of agency-client

relationships and reported on the two research hypotheses for this study. The

qualitative insights gathered from the conduct of this survey research are

discussed in the following section of this thesis.

4.8 Qualitative Analysis

The following section reviews the open ended comments submitted from the final

question in both the agency and client questionnaires. This open-ended Internet

specific question asks both agency and client respondents to provide their agency

or company’s view on Internet advertising. For a detailed report on all agency and

client comments submitted with the survey questionnaires refer to Appendices S

and T for agency and client comments respectively.

Firstly, from the agency respondents there appears to be a mixture of highly

positive responses, regarding the adoption of the Internet by the agency, as well as

several responses which indicate barriers to Internet use. Such potential barriers

include measurement or advertising effectiveness difficulties, and the high costs

involved in the initial set up of the necessary technical support. For example, a


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German agency provides one of the most positive and engaging agency

comments:

“The Internet is the key driver for developing integrated marketing

communications processes. Today, excellent advertising agencies have

to provide excellent services in this area in combination with

outstanding talented people. Creating a sound Internet knowledge base

and defining new processes of cooperation between the different

communication tools is the main challenge for each agency committed

to delivering excellent results.”

A Canadian agency’s comment further confirms this thinking about agency-client

interactive relationships in their statement that the Internet is a “valuable business

tool that our customers require increasing access to and advice on”.

Interestingly, the influence of perceptions of value can be identified in a

Colombian agency’s comments that they are acquiring an Internet company and

they believe that their advertising investment will increase exponentially over the

next five years. Similar thinking is shared by an Austrian agency who reports their

need to “merge with a good local Internet company” as a result of the adoption of

the Internet as a promotional tool.

Whilst perceptions of the value of the Internet have lead many of the respondents

to reflect on the positive attributes of Internet advertising, this does not mean that

participants in the sample were not also conscious of its limitations. Following

comments highlight some perceived barriers to Internet adoption and utilisation as

an advertising channel. For example, some comments about more negative

perceptions of the Internet include:

• Canada – “Internet advertising is extremely difficult to measure ROI at

this point in time.”

• Chile – “Still developing and trying to win a space on client’s minds. Need

for a wider Internet development in our market to become relevant. In the

meantime, offline advertising will remain as preferred by clients.”

• Egypt – “High potential, not clearly defined parameters, not clear on

profitability ratios, not clear on budget requirements, not clear on

campaign evaluation indices (CPM/GPR).”


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• Ireland – “… Internet usage is still in its infancy and proves to be very

expensive medium.”

• United States – “Advertising on the web in the form of banners is proving

unreliable (however) with the advent of rich media and web TV type

media, it will become more viable.”

Examining the research participants’ qualitative statements confirms the

quantitative discussion presented earlier in this chapter. Additionally, these

statements contribute a valuable understanding of the variations between global

agency perceptions and usage of the Internet as a promotional tool. The

statements however, demonstrated more positive perceptions of the Internet,

identifying with expectations that the Internet is emerging as one of the newest

and fastest growing advertising channels. These positive expectations are

complimented by clients in the sample who have current experiences because they

have products or services that appear to suit online promotion. However, these

views are countered by several other clients that currently do not see the benefits

of adopting and utilising this new advertising medium. A highly favourable client

comment regarding the value of the Internet comes from a South African client

respondent:

“Incredible tool – we’re not sure how to exploit it to its fullest.

Transition of physical bricks and mortar environment into the online

arena is uncertain from a strategic platform. Feel that it is imperative

to have a comprehensive strategy before just going online for the sake

of it. Included in this strategy is the marketing rollout for such an

initiative.”

A Swedish telecommunications client comments that the Internet and their web

site “will be one of the most important channels for marketing communication,

sales and consumer retention”; and a South African computer manufacturer,

voices a very similar view, stating that the Internet “is a vital promotional tool to

help the company to become the world’s leading Internet and computing

partner”.

These optimistic projections of the value of the Internet in the advertising industry

are balanced by more cautious clients. For example:


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• Fast food chain, Australia – “Untapped, but has to be used in conjunction

with mainstream media.”

• Consumer products, Germany – “Great opportunity, have to understand

effectiveness and efficiency better.”

• Life Insurance company, Sultanate of Oman – “Great potential for

creating awareness to a mass audience, but we do not see direct sales

eventuating as our business definitely needs a personal interface.”

• Alcoholic beverages, Vietnam – “The beer market is not there. Waste of

time and money.”

• Film manufacturer, Vietnam – “Currently not too promising in Vietnam.

Low computer ownership and Internet usage.”

• Confectionery manufacturer, United States – “Not cost efficient at this

time, nor is there any evidence of its effectiveness in our category.”

The open-ended question concluding both the agency and client questionnaires

proved to be a highly effective device in gaining fresh, relevant and highly

valuable information about both agency and client perceptions of the value of the

Internet as a promotional tool. This descriptive data confirmed the data analysis

previously discussed and identifies that the Internet appears to be in a stage of

continuous growth and change. Based on the findings from within this discussion,

it is evident that the Internet as a promotional tool will influence the agency-client

relationship as both partners learn more and experience positive and negative

outcomes from Internet adoption.

4.9 Summary

This chapter has presented research findings from data gathered using survey

methodology. Drawing from a synthesis of the literature review in Chapter Two,

this investigation aimed to explore the gaps in agency-client relationships, based

on the proposition that sustaining longevity in the agency-client relationship

involves the agency working to avoid gaps from occurring between the clients’

expectations and perceptions of the agency service offering. Pearson’s Chi-Square


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cross-tabulations have been conducted on various client and agency data to test

the research hypotheses drawn from this proposition. Independent t-tests and

ANOVAs have also been utilised in order to apply the modified SERVQUAL

model to the Internet service expectations, in order to examine whether gaps are

prevalent between client and agency service expectations and perceptions of

Internet value. Undertaking the analysis has revealed that there are not significant

differences within the agency-client relationship in regards to value perceptions of

the Internet as a promotional tool. However, some issues do differentiate these

partners. Agencies have higher expectations about physical facilities and being

courteous, which builds trust, when providing quality Internet advertising services

to clients. On the other hand, of more importance to clients is accessing

representatives in the agency who are knowledgeable about Internet advertising

services. The implications of these findings are now discussed in detail in the final

chapter of the thesis.

Chapter Five CONCLUSIONS AND IMPLICATIONS

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Chapter Five: CONCLUSIONS AND IMPLICATIONS

“The first thing one must do to succeed in advertising is to have the

attention of the reader. That means to be interesting. The next thing is to

stick to the truth, and that means rectifying whatever’s wrong in the

merchant’s business. If the truth isn’t tellable, fix it so it is. That is about

all there is to it.”

(John Powers cited in Fox 1984, p.28)

5.0 Introduction

The Internet has experienced tremendous growth as a communication medium,

which has led to the creation of a global online marketplace for business and

consumers (Hoffman et al., 1997). Marketing scholars and industry commentators

suggest that these are challenging times for the advertising industry as they step

into the interactive era. Responding to these significant changes will influence the

advertising agency structure and functions. Furthermore, relationships between

agencies and clients may change, or tensions develop from confusion about what

this new medium has to offer the advertising community. The research undertaken

in this study responds to these issues and has evolved from a broad research

inquiry into studying how the introduction of the Internet as a promotional tool

might impact agency-client relationships in the advertising industry.

Numerous research studies have focused on advertising agency and client

relationships. These studies have typically researched a broad range of

organisational (e.g. Buchanan and Michell, 1991), managerial, and interpersonal

factors (Verbeke, 1988), which all impact on the agency-client relationship. Only

a few studies have been published that have examined advertising on the web and

perceptions of the Internet as an advertising medium (Ducoffe, 1996; Leong et al.,

1998). Even fewer studies have been published that focus on the effect of the

Internet on agency-client relationships. One exception is the work completed by

Alan and Victoria Bush and Sharon Harris (1998), published in the Journal of

Advertising Research. However, additional research is needed to better

understand how the adoption of the Internet as a new advertising channel is being

utilised by both clients and advertising agencies, as this new medium will


113

influence service expectations between agencies and their clients. Advertising

agencies who understand the needs of their clients and in particular, their clients’

expectations of the Internet, will ensure healthy, profitable and long-term

relationships with their clients. Maintaining effective relationships with clients is

important for agencies in both retaining existing client accounts and also in

assisting in the acquisition of new agency business.

This study had two primary purposes. Firstly to build on the existing advertising

research initiated by Bush et al’s (1998) inquiry into advertisers’ perceptions of

the Internet as a promotional tool. The second purpose was to gauge whether

advertising agencies would exhibit a higher value perception of the Internet as a

new communication medium than their clients. Measuring service expectations in

the business-to-business (B2B) environment however presents challenges for

marketing researchers. Interestingly, the study of B2B in the advertising industry

is an under researched area in marketing literature, this is discussed in detail later

in this chapter in Section 5.3.3. The overall aim of this chapter is to address the

research questions and hypotheses of the study as outlined in Chapter One. These

are:

• What are the differences between agency and client perceptions of the value of

the Internet as a promotional tool?

H1: There will be a significant difference between client and agency

perceptions of the value of the Internet as a promotional tool.

• ‘What are the differences between agency and client expectations of value of

the Internet as a promotional tool?’

H2: The greater a client’s Internet experience, the greater will be their

service expectation of Internet advertising.


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5.1 Value Perceptions of the Internet as a Promotional

Tool

This research study assumed that there would be significant differences between

agency and client perceptions of the value of the Internet. Specifically it was

assumed that advertising agencies would express a higher perceived value of the

Internet as a promotional tool than their clients. This assumption was informed

from mass media and industry press, which indicated that advertising agencies

were embracing new advertising creative in website designs and strategic

marketing activities, using interactive media such as newsgroups and email to

reach customers. However, the research of Bush et al. (1998) and Ducoffe (1996)

suggests that little is known about the value of these Internet-based activities. This

thinking raises questions, such as: “Are advertisers feeling compelled to jump on

the Internet bandwagon because of its popularity?” Or, given the dynamic and

changing technology of the Internet, “Are advertising agencies confused about

what the Internet actually has to offer clients in terms of actual revenue?” The first

research question explores this thinking by asking: “What are the differences

between agency and client perceptions of the value of the Internet as a

promotional tool?” A range of statistical measures (i.e. Pearson’s Chi-Square,

Independent t-tests and ANOVA) were used to test the differences in value

perceptions between agencies and their clients. Analysis did not reveal any

significant differences between agency and client perceptions. In fact, agencies

and their clients’ perceptions of the value of the Internet as a promotional tool are

closely related.

All advertising agencies within the worldwide agency network indicated that they

perceived the Internet to add value to their clients’ existing promotional mix.

Although a statistical analysis could not be undertaken, an exploratory study of

these results found that the majority of client respondents (90.7%) also agreed that

the Internet could add value to their existing promotional mix. This is an

interesting discovery that both stakeholders in the relationship value the Internet

as a promotional tool. This finding indicates future growth of Internet advertising.

This is supported by industry reports about the continued growth in advertising


115

revenue from Internet advertising. As Aldred (2000) reported at the end of 2000,

Australian Internet advertising spend was estimated at $100 million, with some

agencies spending in excess of $100,000 a month and others spending up to

$20,000 a month on their online advertising.

Agencies and clients involved in this study believe that the Internet has value as a

promotional tool. In the B2B environment therefore, it appears that advertising

agencies do not have significantly higher expectations of the value of the Internet

than their clients. Clients do understand the value of this new communication

medium and are embracing this channel actively as a promotional tool. This is not

to say however that they did not identify a number of barriers to its usefulness in

the advertising industry. Bush et al. (1998) identified barriers to the adoption of

the Internet which included: the use of the Internet as a marketing tool; security

and privacy issues; and the ability to measure the effectiveness of the Internet.

Whilst these issues were not identified as significant issues for members in the

advertising agency network involved in this study, the issue of measurement was

raised in the qualitative statements made by respondents. A statement from a

Canadian agency typifies this feeling, stating “Internet advertising is extremely

difficult to measure ROI at this point in time”. Whereas a statement from a

German agency reveals some of the barriers to using the Internet in marketing

communication: “defining new processes of cooperation between the different

communication tools is the main challenge for each agency committed to

delivering excellent results”. Bush et al. (1998) also point out that the high initial

set up costs of offering Internet advertising services is a significant barrier. Again,

issues raised in the qualitative data background this issue for some respondents. A

client in the United States, involved in manufacturing confectionery stated that

Internet advertising was not “cost efficient at this time, nor is there any evidence

of its effectiveness in our category”.

In Bush and Bush’s (2000) later research, they indicated that Internet advertising

activities were being developed in-house by clients. In effect, the roll-out of the

Internet has encouraged clients to develop new in-house advertising functions (i.e.


116

building their own websites and attempts to design banner ads). Typically, clients

would not think to develop television and radio advertising in-house, however, it

appears that some clients believe they have the expertise to design and launch

Internet advertising. The Internet has blurred the roles traditionally performed by

the agency and the client. Other findings from Chapter Four also indicate that

several clients in the network are either using in-house ‘bundled’ services or

Internet advertising specialists for their Internet advertising activities instead of

their advertising agency. In many cases the client decision is a result of a lack of

confidence in the agency’s skill base (De Weaver, 1997). A qualitative statement

from a Romanian respondent elaborates this point, explaining: “an agency will

need to be able to give advice, consultancy and services related to the Internet, so

that the ‘full service agency’ can continue to have the proper meaning’.

Advertising agencies are losing profits to other industry competitors. This finding

was supported in this research study which identifies the need for advertising

agencies within the international network sample to review their service offering

to clients. It appears these agencies are losing market share and profit to clients

who are either ‘bundling’ their marketing activities in-house, or using Internet

advertising specialists to perform their online activities, instead of the advertising

agency.

Whilst barriers to Internet advertising have been identified by agencies and their

clients, the findings from this study reveal that members of the network are using

the Internet for advertising purposes. Whilst client use of the Internet appears to

be quite slow (i.e. less than six month period), they demonstrate considerable

experience with the functionalities of the Internet. The most common forms of

Internet usage reported in the client sample included: World Wide Web (WWW),

email, mailing lists and newsgroups. The least used forms of interactive

advertising used by clients to promote and/or sell products were Internet Relay

Chat (IRC) and discussion groups. In the following section the relationship

between agencies and their clients is discussed further through the lens of service

quality using SERVQUAL.


117

5.2 Service Expectations of the Internet as a

Promotional Tool

To examine more closely agency-client value perceptions of the Internet, service

expectations were explored. To recap, service expectations are the result of the

comparison of what clients expect service firms should offer, and service

perceptions are the evaluations of the performance of the firm(s) providing the

service offering. A modified SERVQUAL model of service quality (Parasuraman

et al., 1988) was used to explore this relationship for this research study and the

implications of this model are outlined in the following section.

5.2.1 Differences in Agency-Client Expectations of the Internet

The second research question examined in this study was: “What are the

differences between agency and client expectations of the value of Internet as a

promotional tool?” While there is extant literature on consumer marketing

processes and activities involving the Internet, there is a lack of substantial

research on B2B marketing (Boyd and Spekman, 2001). B2B marketers can learn

from existing B2C literature and apply these principles to the B2B environment.

The adoption of B2C literature for B2B has been undertaken in this research

study. The adapted SERVQUAL model was utilised in this research study for the

B2B environment. However, the model itself is not without its limitations and

challengers. While the SERVQUAL model was innovative in research for B2B at

the time, Durvasula, Lysonski and Mehta (1999) warn that service quality

measures for the consumer market need to be applied with caution in the B2B

environment. Van Dyke, Kappelman and Prybutok (1997) argue that the

SERVQUAL model has numerous problems, particularly in relation to reliability,

validity, correlations and variance. These experiences were also evident in the

statistical findings of the B2B research conducted in this study. However, Pitt,

Watson and Kavan (1997) dispute Van Dyke et al.’s (1997) claims stating that

SERVQUAL is grounded in conceptual work and extensive focus group research.

Whilst disputes continue over the appropriateness of the SERVQUAL tool in


118

B2B research, its application to this study has highlighted some interesting

findings. These are discussed in the following section.

The five components used in the modified SERVQUAL model (tangibles,

reliability, responsiveness, assurance and empathy) were first tested for reliability.

Four of these five components were found to be reliable (tangibles, reliability,

responsiveness and assurance). t-tests were then conducted on these four reliable

SERVQUAL components, in order to ascertain whether there were differences

between agency and client expectations of Internet value. However, no significant

differences between the agency and client responses within these components

were identified. Instead the agency and client perceptions of the value of the

Internet as a promotional tool appeared to be fairly even. No gaps between

expectations could be proven, illustrating that clients actually do appear to

understand the value of the Internet as a promotional tool and in many cases are

already actively including this new channel in their communications mix.

The EMPATHY component within the SERVQUAL model was found to be

unreliable. However, individual t-tests on the five individual questions within the

surveys which comprised the EMPATHY component, found that there was a

statistically significant difference between agency and client perceptions on one of

the empathy aspects: understanding client’s needs. Results indicated that clients

actually placed a higher level of importance on their agency’s understanding of

their specific Internet needs, than their agencies had indicated. This finding

contributes to an understanding of client behaviour, as discussed in the preceding

section, indicating that clients are seeking specialist services, or developing their

own in-house Internet advertising functions.

Additionally, this finding identifies a further possible area of concern for

advertising agencies. Agencies need to prevent gaps which may occur between

agency and client expectations, from turning into client dissatisfaction with their


119

agency’s service performance. Adapting the SERVQUAL instrument for the B2B

context has identified that agencies within the international network need to

persuade their clients that their agency highly values the use of the Internet as a

promotional tool and that they provide superior quality Internet advertising

services. Apart from this statistical significance, the other four empathy questions

revealed similarities in the expectations of value between both clients and their

agencies. It was found that in general, agency and client responses pertaining to

agency services, relationships and an understanding of the Internet are closely

paralleled.

There were however, two other survey questions within the Internet service

expectations section of the agency and client questionnaires that reported

statistical significances. Firstly, a gap was evident between agency and client

perceptions, which related to the importance of account representatives being

consistently courteous to clients. It was found that agencies placed a significantly

higher level of importance on this characteristic than their clients, agencies

thereby reinforcing their belief in the importance of providing clients with

excellent service. Secondly, clients perceived the characteristic of physical

facilities of excellent advertising agencies as being visually appealing not to be as

important as the agencies’ perception. Identifying such gaps between agency and

client expectations can assist the agency in establishing and maintaining a solid

partnership with their clients. This awareness can ultimately prolong the lifespan

of the agency-client relationship and revenue stream for the advertising agency.

5.2.2 Impact of Internet Experience on Service Expectation

In order to ascertain value perceptions it was important to measure the value

clients associate with the service aspects of an agency’s Internet advertising

service. As discussed in Chapter Two, value is defined as the worth of the

element. Drawing on Ducoffe’s (1996) explanation, value is explained as coming

from the expectations of the offering and the experience that is gained through its

use. To examine experience more closely in this study, clients’ descriptions of


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Internet users (i.e. WWW only user; email-based user; interactive user -

newsgroups, discussion groups) and non-Internet use, were employed to examine

if clients’ Internet experiences influenced their Internet advertising expectations.

As indicated by Ducoffe’s definition, experience of the Internet’s interactive

functionality would be expected to influence clients’ overall expectations of the

Internet. The statistical test of ‘analysis of variance’ (ANOVA) used to examine

clients’ responses did not reveal any significant differences between those clients

with Internet experiences, and those without. However, exploring experience with

Internet functionality further using a cross-tabulation to examine relationships

between experience with interactive Internet functions (e.g., interactive

categorisation) and sales achieved from Internet advertising efforts, did illustrate

that clients in the sample who have embraced more interactive functionality, also

reported greater sales. Additionally, Chi-Square analysis indicated that there is a

trend towards greater sales when clients employ more interactive functions in

their Internet advertising efforts.

Inspite of these positive trends, what was most evident from analysing

stakeholders’ experiences more closely, was that members of the international

advertising agency network were more cautious about the expected revenue value

to be gained from Internet advertising. This sentiment was confirmed in

qualitative statements made by respondents. For example, a representative from a

Life Insurance company stated: “Great potential for creating awareness to a mass

audience, but we do not see direct sales eventuating as our business definitely

needs a personal interface”.

This research study set out to prove that differences would exist between agency

and client expectations of the value of the Internet as a promotional tool. The

application of the modified SERVQUAL model to the survey data revealed that

agencies and their clients share common perceptions about the value of the

Internet as a promotional tool. This finding is very positive for advertising

agencies within this international agency network. Primarily because the existence


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of gaps between agency and client value expectations could lead to tension in the

agency-client relationship. The following section now turns to a broader

discussion of implications of these research findings for the advertising industry,

advertising research and future B2B services research.

5.3 Implications

This research study was primarily undertaken in order to ascertain whether there

were gaps between agency and client perceptions of the value of the Internet as a

promotional tool and to establish an understanding of how this new

communication channel would affect the agency-client relationship. Arguably, as

the Internet diffuses more widely within the advertising industry and within the

consumer context, value perceptions will change based on these experiences. This

research primarily focused on examining the Internet as a ‘value add’ to current

advertising agency services. Value adding, as defined by Escover (1994) is

anything that contributes to an increase in profits, or functions that directly

generate and deliver satisfaction of a product or service. As discussed in the

preceding section, data analysis has revealed mixed findings about the value of

the Internet as a promotional tool. On the one hand, a small percentage of clients

have achieved greater sales and attribute these to their Internet advertising efforts.

These clients would advocate that the Internet has added value to their business.

On the other hand, other clients believe that at the current time promotional efforts

online are not working for specific industries. For example, one advertising

stakeholder from Vietnam involved in selling alcoholic beverages expressed:

“The beer market is not there; Waste of time and money.” Arguably the future of

the Internet as a value-add in advertising services is summarised in the sentiment

expressed by a respondent in Bangkok that illustrates the challenges facing the

advertising industry:

“It is the fastest growing sector with a lot of MYTH and unknown factors.

Some want to jump into it without a thorough understanding of the nature

and environment of this medium. Some are too afraid to get involved with


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it. However, this is a great opportunity for those who really understand the

medium and people’s behaviour towards using the Internet.

5.3.1 Implications for Advertising Theory and Practice

Although several research studies have been conducted on advertising agency and

client relationships (Beard, 1996, 1999; Henke, 1995; Michell et al., 1992;

Michell and Sanders, 1995), very little research appears to have been conducted

on the effect of the Internet on agency-client relationships. One exception has

been the research work undertaken by Bush et al, (1998) and Bush and Bush,

(2000). The research undertaken in this study responds to this gap in the

marketing and advertising literature by providing interesting insights into agency

and client perceptions and expectations of the Internet as a promotional tool.

The findings from this research demonstrate that agencies and clients hold similar

perceptions of the value of the Internet as a promotional tool. Prior to reviewing

the impact of the Internet on the agency-client relationship, several overall

relationship findings should be noted. Literature relevant to agency-client

relationships outlines that no matter how good the creative or strategic product

that comes out of the advertising agency, the relationship with one’s client will

determine the success of an account and the agency’s long term maintenance of

an account. The establishment of strong, productive, positive relationships

between both client and agency personnel is therefore imperative for an agency to

maintain a client account and remain economically profitable. In relation to the

implications of the research findings for the advertising industry as a whole, six

key findings of interest were identified.

Firstly, there has been a client push for agencies to provide Internet advertising

services. Whilst a number of agencies in the sample population acknowledge that

they are not adopting the Internet into their service offering, these agencies will

need to up-skill in order remain competitive and retain profits and client accounts.

Evidence from this study and the published advertising literature confirms many

clients in the advertising industry are already using the Internet as a promotional


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tool and in most cases without the involvement of their advertising agency

(Charles, 1997; De Weaver, 1997). In many cases advertising agencies have been

found to be reactive and actually forced by their clients to provide Internet

advertising services in order to satisfy their requirements for an online presence.

This research study found that many agencies have failed to even include the

Internet in their initial media recommendations to clients. Two primary reasons

were identified, firstly due to the lack of expertise in this field (De Weaver,

1997); and secondly, due to agency perceptions of small financial returns

achievable from the high initial set up costs involved in providing Internet

advertising services (Charles, 1997). This research identifies the vital importance

and wake up call for advertising agencies to review their Internet service offering

to their clients. If Internet services are not included in the agency service offering

and the agency does not acquire the necessary skills, staffing and technology to

offer quality Internet services, clients will seek out other specialist service

suppliers to fulfil their Internet advertising needs. As a result, advertising

agencies will lose profit, and ultimately client accounts.

The second key finding involves increased market competition and the client

practice of ‘unbundling’. Over the past decade the services of the traditional

advertising agency have been under attack by increased market competition. New

communication tools have evolved and specialists have entered the marketplace.

The findings from this study reveal that some clients are using their traditional

advertising agency to develop their Internet advertising activities. However, the

maintenance of their Internet advertising is often fulfilled in-house or by Internet

advertising specialists. These new competitors to the traditional advertising

agency are providing specialised services at more competitive and cost effective

prices. The client practice of ‘unbundling’ and the increasing use of in-house

facilities have now evolved to greatly impact on the services utilised by the

advertising agency’s clients. In response, advertising agencies are being forced to

broaden their service offering to clients to include all aspects of communication

(Kassaye, 1997). Agencies also need to ensure they provide their clients with

value added services, including Internet advertising. However, in order for


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advertising agencies to begin providing Internet advertising services to their

clients, the roles of the agency will need to be modified, or possibly expanded,

and additional technical services, knowledge, staff and facilities will be required.

This study’s findings indicate a very high proportion of agencies have recently

pitched Internet advertising to their clients. Agencies are taking action to

incorporate Internet advertising services in their service offering, but the market

competition is intense.

The third key implication for the advertising industry involves the evolution of

the Internet which is forcing agencies to move away from their traditional

structure and services, to become integrated communication agencies. Those

agencies that do not adopt the Internet and begin to incorporate this new medium

into their clients’ promotional mix, will quickly be surpassed by more

competitive agencies or industry competitors (Kassaye, 1997). As a result, clients

may also begin to look for better service providers. With the evolution of the

Internet as a new communication medium and advertising channel, the modern

agency, or agency of the future, will need to become a communication specialist,

or a communication agency, moving away from the traditional agency focus on

basic advertising functions to integrated communication. The research findings

from this study revealed that several agencies had identified the need to become

integrated communication specialists and were either actively incorporating

Internet service functions in-house, building partnerships with external suppliers

or acquiring independent Internet advertising specialist companies. While the

emergence of new service providers or specialists has created serious competition

for the traditional advertising agency (Kassaye, 1997), it has also created the

potential to threaten the agency-client relationship (Bush and Bush, 2000), which

is discussed further in the following section.

For agencies to survive in the competitive marketplace, the fourth implication

involves the need to maintain client accounts by ensuring agencies have strong,

productive, positive relationships with all clients. Loss of client accounts can be

damaging to an agency’s reputation. Regular client/agency evaluations are


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recommended in order to evaluate and monitor the strength of agency-client

relationships. Client evaluations also help to identify any areas of weakness or

possible tension that the agency should address in order to maintain a healthy

agency-client relationship. Such client evaluations of agency services provides

crucial strategic information and offers an opportunity for agencies to pre-empt

any negative shifts in market share that will almost inevitably follow changing

client (and potential client) preferences (Na et al., 1999, p.39).

The fifth implication is the introduction of the Internet into the agency’s service

offering is blurring the roles performed between the agency and the client, and

thus greatly affecting the agency-client relationship. In order to ensure a healthy

agency-client relationship, agencies will need to invest in acquiring the necessary

skills and technology to service client online promotional needs to the satisfaction

of the client. One of the objectives of this research study was to investigate

whether the adoption of the Internet as a new promotional tool would affect the

agency-client relationship. A review of the literature revealed that the

introduction of the Internet and particularly the WWW, as a new advertising

channel is blurring the roles performed by the client (advertiser) and the

advertising agency (Kassaye, 1997).

It was also found that advertising agencies who are currently unskilled in the

application of the Internet as an advertising channel, will need to invest in

acquiring the necessary skill-building and web technologies (Kassaye, 1997) in

order to operate and profit through the utilisation of this new online medium. And

most importantly, the acquisition of Internet servicing skills is necessary in order

to maintain prosperous relationships with all of the agency’s clients. The next

section overviews the importance of identifying gaps between agency and client

expectations of the value of the Internet as a promotional tool, in order to

maintain a healthy agency-client relationship.

The final key implication for the advertising industry involves the need for

agencies to be aware of gaps that might occur between agency and client


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expectations of the value of the Internet as a promotional tool and on any other

agency services. Gaps between agency and client expectations could be

detrimental to the agency-client relationship and agencies need to take measures

to correct such gaps or prevent any perceptual gaps from occurring. While this

research study attempted to prove that gaps exist between agency and client

expectations of the value of the Internet, an investigation into Internet

expectations found that a very high proportion of both agencies and clients agree

that the Internet is a valuable promotional tool. In fact all agencies (100%) within

the international agency network surveyed, perceived the Internet to add value to

the client’s existing promotional mix. With the adoption of the Internet as a new

promotional tool, if gaps arise between the agency and client expectations of

Internet value, then the existence of these gaps and the wider the gaps are, the

more client dissatisfaction will arise. If the agency is aware of such gaps existing

in relation to their client’s Internet value expectations, then the agency can take

counter measures in order to close these gaps and ensure client satisfaction, thus

prolonging the agency-client relationship.

In summary, apart from a client push and competitive industry pressures, the

Internet is challenging the service offering and structure of advertising agencies.

Agencies will need to become full service communication agencies and provide

integrated marketing functions including Internet services, in order for survival in

this dynamic industry. The adoption of the Internet as a promotional tool is now

blurring the roles performed between the client and the agency and adding

pressure on the agency-client relationship. Agency-client evaluations are

therefore recommended on an ongoing basis in order for the agency to assess

their client relationship. Such evaluations will assist in identifying if gaps

between client expectations of Internet service occur, in which case client

dissatisfaction could be resultant. Client dissatisfaction should be quickly

resolved in order to sustain strong, productive, prosperous agency-client

relationships.


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The findings from this research contribute to the advertising research initiated by

Bush and Bush (2000) and the broader advertising industry literature of which

very little research into Internet service provision has previously existed. Aside

from contributing to further knowledge about advertising research, the research

findings from this study have also added to the presently small amount of

literature in existence on B2B relationships and especially in relation to the use of

the Internet. The following section of this discussion chapter outlines how this

research study has contributed to the body of knowledge on B2B research.

5.3.2 Implications for B2B Research

The adapted SERVQUAL service quality measurement model as designed by

Parasurman, Zeithaml and Berry (1988) and previously discussed, has opened up

a myriad of challenges for B2B marketing researchers. Whilst many researchers

argue the merits of this measurement model, it was effective within the scope of

this research study, in ascertaining and measuring gaps between agency and client

expectations of Internet value.

The research findings from this study provide interesting insights into B2B

research. As discussed in Chapter Two, while there is extant literature on

consumer marketing processes and activities involving the Internet, there is a lack

of substantial research on B2B marketing (Boyd and Spekman, 2001). In

particular, B2B research in relation to advertising agency services and client and

agency relationships appears to be non-existent. Therefore for the purposes of this

study, many of the aspects of business-to-consumer (B2C) marketing theory were

adopted and applied to the B2B relationship between advertising agencies and

their clients. Advertising agencies provide B2B marketing services to their clients,

in order to assist in the promotion of their product, service or idea to their target

markets. The Internet now plays a valuable role in the development of B2B

relationships, allowing for improved efficiency and assisting in the provision of

better service through the use of integrated transactions (Dann and Dann, 2001),

This research study solely focused on B2B relationships within the advertising


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industry, thereby contributing valuable knowledge to the limited B2B literature

available.

Apart from Boyd and Spekman’s (2001) study into the Internet’s ability to drive

value creation in B2B relationships, there is very limited research to date

regarding the value of the Internet in B2B relationships. This research study

examined advertising agency and client relationships in relation to the use of the

Internet as a promotional tool, and agency-client expectations of Internet value.

Ultimately this research study has contributed useful knowledge about the

challenges of using the Internet in the B2B context, specifically in the advertising

industry. Whilst this research study has contributed interesting insights into

agency-client relationships, several research limitations have became apparent

during data gathering and analysis. A discussion of these research limitations and

how they were addressed during the research process is outlined in the following

section.

5.4 Research Limitations

As is common with many research studies, there were complications observed and

overcome in the collection of survey data. During the conduct of this study there

were several factors that may have affected the survey data gained and possibly

limited the scope of this study’s findings. As a result, the statistical methods

chosen to report differences between agency and client expectations of the value

of the Internet as a promotional tool, may have been affected by the survey data

collected. The following section overviews the five main research limitations

identified in this study. Included in the following discussion are the measures

taken by the researcher to reduce these research limitations.

Firstly, while the time period of the research data gathering phase spanned over an

eight month period from late October 1999 to June 2000, the planning and

production of the research method and research tool actually commenced in 1998.

The nature of the phenomenon itself - that it is a dynamic medium, which has


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experienced explosive growth, may have influenced the research results.

Specifically, the research questions focused on examining agency and client

perceptions, which are based on the current experiences of the Internet. Over the

research planning and data collection period, the general public and business

sector have become more experienced in using PCs (personal computers) and the

Internet, thus adoption rates of Internet usage have continued to grow

dramatically. As a result, during the data collection phase of this research study

client perceptions of the value of the Internet as a promotional tool would have

continued to change in importance. This may have resulted in clients moving

closer to their agencies’ perceptions, possibly as a result of this new

understanding and adoption of the Internet.

Just as the Internet is a new phenomenon for advertising agencies, there were

challenges to overcome with the set up and use of the online database. The second

research limitation identified from this study involved data coding errors. Some

data coding errors occurred during the data collection phase of this research study.

Unfortunately coding errors occurred on both the agency and client

questionnaires. While various levels of pre-testing of the online database were

undertaken, such errors resulted in the removal of some questions and/or response

items from the database of results and further data analysis.

The third research limitation involves the likert scale used in the questionnaires

for data analysis. The use of a 4-point plus ‘no opinion’ likert scale (eg. 1:

strongly disagree; 2: disagree; 3: agree; 4: strongly agree; and no opinion) led to

limited data analysis. This likert scale was used for the 26 SERVQUAL adapted

questions of the Internet service expectations section (Section A – see Appendices

A and B) of both questionnaires. The use of this scale may have affected the level

of statistical analysis achieved and reduced the survey data reliability. Some

marketing scholars would argue that a greater variability in data analysis would

have been achieved if this study used a 7-point likert scale. This could have led to

a greater sensitivity in the research findings, if they exist. In marketing research

the 7-point likert scale (eg. 1: strongly disagree; 2: moderately disagree; 3:


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disagree; 4: undecided; 5: agree; 6: moderately agree; and 7: strongly disagree) is

preferred in order to gain more statistically significant results. However, the 4-

point plus ‘no opinion’ likert scale was utilised in this research study over the 7-

point likert scale because the researcher wanted to accurately gauge the

respondents’ agreement or disagreement on a particular question, by forcing them

to select a more definite indicator for their response. Using a 7-point likert scale

would be a recommendation for future research or for a follow-up survey, in order

to undertake further statistical analysis which would be permitted by this scale.

The fourth research limitation identified relates to the sample size utilised in this

research study. The survey sample size of 65 agencies and 58 clients may have

influenced the data results. The survey data gathered and analysed in this study

indicates certain trends towards revealing differences in expectations that exist

between advertising agencies and their clients. However such differences were not

at a statistically significant level to reject the null hypotheses for this study. If a

larger sample size could have been tested, possibly more statistically significant

differences between client and agency expectations of the value of the Internet,

based on the four reliable modified SERVQUAL model components may have

been revealed. The larger the sample size, the more accurately and reliably the

statistical tools Chi-Square tests and t-tests can be applied. It should be noted that

in gathering survey responses from advertising agencies and their clients on a

worldwide scale, it was not possible to obtain responses from all agencies within

the international agency network for this study primarily due to language barriers,

busy work schedules and often uninterested parties. However, the research

findings gained from this international study provide useful insights into agency

and client use of and expectations of the value of the Internet as a promotional

tool.

5.4.1 Interpretation of Agency-Client Response Discrepancies

The final research limitation was identified when comparing agency and client

survey data in a descriptive manner. Several data discrepancies were recognised.

Whilst these discrepancies were ultimately beyond the control of the researcher,


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they did affect the survey data collected. The following reporting outlines these

discrepancy occurrences.

The research study identified several regions where conflicts between agency and

client survey data occurred, these include: Canada, Peru, Nicaragua, Vietnam,

Romania, Egypt and the Sultanate of Oman. In some cases the advertising agency

did not appear to be aware of their client’s Internet activities, even though several

clients indicated that their advertising agency was responsible for providing their

Internet specific services. This finding illustrates that it is vitally important for

these advertising agencies to undertake further action to better understand their

clients’ Internet needs and perceptions. Since opportunities appear to exist for

these agencies to provide Internet advertising services to those clients currently

using the Internet as a promotional tool and possibly currently utilising the

services of an external Internet provider.

The discrepancies identified between the agency and client survey data cannot be

explained further without undertaking personal interviews with both the clients

and agencies in question. Nevertheless, as a result of the adoption and use of the

Internet, such discrepancies between agency and client perceptions can contribute

to client dissatisfaction and tension in the agency-client relationship and therefore

they should be addressed immediately by the advertising agency.

Two primary reasons for the possible discrepancies between agency and client

data with regard to the use of and provision of Internet services were identified in

this research study. Firstly, several advertising agencies from advanced countries

around the world, appear to have sister agencies who are solely devoted to

servicing a client’s total Internet communication needs. These Internet specialists

may act as operating partners separate to the client’s advertising agency, and

facilitate the client’s total Internet needs on behalf of the advertising agency. This

has certainly been identified as the case for the agencies located in New York

(USA) and Melbourne (Australia); who have established ‘digital’ agencies who

operate alongside the advertising agency office.


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The second potential rationale for the discrepancies between agency and client

survey data with regard to the use of and provision of Internet services, could be

as a result of the agency buying Internet media space (for example, banner ads) on

behalf of the client. However, the agency may not actually be responsible for

designing or maintaining the client’s Internet activities. In this case the client may

have assumed and responded in their questionnaire that their agency provides

their Internet advertising services. The agency respondent however may have

indicated on their questionnaire that they do not provide Internet advertising

services. Such discrepancies were beyond the control of the researcher; however

were observed and taken into account during data analysis. Following on from

this discussion of research limitations identified within this study, the following

section now overviews previous research studies undertaken in the field and

provides recommendations for future research.

5.5 Future Research

Numerous research studies have been conducted into the use of the Internet as an

advertising medium (Berthon et al., 1996; Briggs and Hollis, 1997; Ducoffe,

1996; Leong et al., 1998), the perceptions of the Internet as an advertising

medium (Ducoffe, 1996; Leong et al., 1998), and advertising agency and client

relationships (Beard, 1996, 1999; Henke, 1995; Michell et al., 1992; Michell and

Sanders, 1995). Research has also been conducted in relation to understanding the

factors that influence advertising agency and client relationships. Michell and

Sanders (1995) developed a model for understanding inter-organisational loyalty

in agency-client relationships, while Henke (1995) studied the key predictors of

an agency switch. Michell et al. (1992) also researched the specific causes of

disaffection in the agency-client relationship, which could lead to termination of

the agency’s contract. However none of this research has been conducted in

relation to the use of the Internet as a promotional tool.


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Other useful, significant research studies in the field of advertising agency-client

relationships includes an assessment of advertising agency service quality, with

the purpose of finding out the dimensionality of advertising agency services and

measuring their service quality (Na et al., 1999); and research into client role

ambiguity as a source of dissatisfaction in agency-client relationships (Beard,

1996). Again, very little research to date has been conducted on the effect of the

Internet on agency-client relationships. The only exception being Bush et al.

(1998) and Bush and Bush (2000), who recently studied agency and client

perceptions of the Internet as a communications tool. This present study also

explored agency and client perceptions of the value of the Internet as a

promotional tool, across an international sample.

Whilst the research findings illustrate that significant gaps between agency and

client perceptions of the value of the Internet were not prevalent during the period

of this study, there appeared to be several cases of agency and client perceptual

differences on a geographical scale. Further research is recommended in order for

advertising agencies to ensure that gaps between agency and client perceptions of

the value of and the use of the Internet as a promotional tool do not develop,

which could affect the status of the agency-client relationship. Longitudinal

studies into agency-client relationships and the effect of the use of the Internet as

an advertising medium are a logical next step. Longitudinal research will assist in

revealing whether changes in agency-client perceptions of Internet adoption, value

perceptions and usage levels, develop over time and whether such changes result

in a positive or negative influence on the agency-client relationship, as the

Internet matures as a communications medium.

Further cross-cultural studies are likely to reveal which regions of the world are

adopting the Internet as a new advertising channel, how adoption levels are

changing over time and which factors may affect Internet adoption levels and

value perceptions. Agency-client case studies within advertising agency networks,

like the sample used in this present study, should be developed in an attempt to

track changes in agency service structures and agency-client relationships, as a


134

result of the implementation of Internet services and the use of the Internet as a

new advertising medium.

While Internet adoption rates continue to grow and the demographic and

psychographic profile of Internet users becomes more identifiable, the service

structures of the advertising agency will change dramatically, as will the nature of

the agency-client relationship. Maintaining a successful agency-client relationship

is the most important concern to the advertising agency. Establishing the right

chemistry between the client and the agency and creating mutual respect are

highly important factors in preventing an agency-client relationship from

deteriorating. Further in-depth research is therefore suggested into this new field

of interactive agency-client relationships.

A replication of this research study within a time period of two to five years, using

the same worldwide agency network would also add to the limited body of

knowledge on the effect that the Internet has on advertising agency and client

relationships. A follow up study would also help to identify important changes

between client and agency use of, and provision of Internet advertising services.

Replication of the present research study could then be followed up with further

studies with the same scope and objectives of this research study at subsequent

time intervals.

Whilst some significant research has been conducted in relation to the use of the

Internet as an advertising medium, and agency and client relationships, further

research is vital. Further studies into the impact of the Internet and other

technological advances on the agency-client relationship will assist advertising

agencies in building stronger, more valuable relationships with their clients. As a

result, agencies will maintain productive, profitable, valuable and long term

relationships with their client base. Ultimately, it is the status of the agency-client

relationships that will affect the life span of the advertising agency.


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5.6 Summary

This chapter has reported on the research findings and limitations gained from this

research study. An interesting finding from this research has been that agencies

and clients hold similar perceptions about the value of the Internet as a

promotional tool. Furthermore, whilst some clients in the survey population had

value added to their business through Internet advertising, the majority were more

cautious about the value of the Internet in generating bottom-line profits.

Interestingly, this study has demonstrated that clients do understand the value of

the Internet as a new communication medium and are embracing this channel

actively as a promotional tool. While it was expected that variations in experience

of the Internet’s interactive functionality would influence clients’ Internet

advertising service expectations, it was found that there were no significant

differences between clients with Internet experience and those with no Internet

experiences. This thesis has presented important findings for advertising agencies

and in particular how they can work to ensure a healthy and profitable long term

agency-client relationship.

The implications of these research findings for the advertising industry and B2B

research have been outlined, along with a discussion on the research limitations

identified and addressed during the research collection phase. In the future, further

agency-client case studies are recommended as a direction for advertisers

interested in studying agency-client relationships and the impact of the Internet as

a promotional tool in the B2B advertising industry.

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APPENDIX A

Web-based Agency survey questionnaire

APPENDIX A

144

APPENDIX A

145

APPENDIX A

146

APPENDIX A

147

APPENDIX A

148

APPENDIX A

149

APPENDIX A

150

151

APPENDIX B

Web-based Client survey questionnaire

APPENDIX B

152

APPENDIX B

153

APPENDIX B

154

APPENDIX B

155

APPENDIX B

156

APPENDIX B

157

158

APPENDIX C

Survey coding for advertising agency

questionnaire

APPENDIX C

159

AGENCY SURVEY CODING

SECTION A:

FOR ALL QUESTIONS 1 – 26:

1 = Strongly Disagree

2 = Disagree

3 = Agree

4 = Strongly Agree

5 = No Opinion

1. Excellent advertising agencies will have modern-looking equipment.

2. Excellent advertising agencies will give clients individual attention.

3. When excellent advertising agencies promise to do something by a certain

time, they will do so.

4. Account representatives of excellent advertising agencies will give prompt

Internet advertising service to clients.

5. The account representatives of excellent advertising agencies will understand

their client's specific needs with regard to advertising on the Internet.

6. Employees of excellent advertising agencies will be neat appearing.

7. Account representatives of excellent advertising agencies will never be too

busy to respond to client requests.

8. Excellent advertising agencies will have account representatives who give

clients personal attention.

9. Account representatives of excellent advertising agencies will be consistently

courteous with clients.

APPENDIX C

160

10. The physical facilities at excellent advertising agencies will be visually

appealing.

11. When clients have a problem, excellent advertising agencies will show a

sincere interest in solving the problem.

12. Account representatives of excellent advertising agencies will have the

knowledge to answer client questions with regard to Internet advertising and

promotional activities.

13. Excellent advertising agencies will have the client's best interests at heart.

14. Excellent advertising agencies will have top of the line computer hardware and

software for Internet use.

15. Excellent advertising agencies will perform services related to advertising on

the Internet right the first time.

16. Excellent advertising agencies will have operating hours convenient to all their

clients.

17. Materials associated with the Internet / web site design services will be visually

appealing in an excellent advertising agency.

18. When clients have a problem related to advertising on the Internet, excellent

advertising account representatives will work effectively and efficiently

towards solving the client's problem.

19. Excellent advertising account representatives will provide clients with

comprehensive background research on their strategies for advertising on the

Internet.

20. Account representatives of excellent advertising agencies will always be willing

to help clients to understand their strategies for advertising on the Internet

and the effectiveness of the Internet campaign.

21. Clients of excellent advertising agencies will feel safe in their transactions.

22. Excellent advertising account representatives will endeavour to make their

clients feel safe in their product / service investments with regard to

advertising on the Internet.

APPENDIX C

161

23. Excellent advertising agencies will insist on error-free records.

24. The behaviour of account representatives of excellent advertising agencies will

instil confidence in clients.

25. Excellent advertising agencies will provide their services at the time they

promise to do so.

26. Account representatives of excellent advertising agencies will tell their clients

exactly when services will be performed.

SECTION B:

27. Do any of your clients advertise on the Internet?

1 = Yes

2 = No - SKIP TO QU. 30

28. What percentage (%) of your clients advertise on the Internet?

1 = 0% 2 = 1 – 10% 3 = 11 – 20% 4 = 21 – 30% 5 = 31 – 40% 6 = 41 – 50% 7 = 51 – 60% 8 = 61 – 70% 9 = 71 – 80% 10 = 81 – 90% 11 = 91% +

29. Do any of your agency's top three billing clients advertise on the Internet?

1 = one of these clients 2 = two of these clients 3 = all three of these clients 4 = none of these clients

APPENDIX C

162

30. Does your agency provide Internet advertising services?

1 = Yes


31. What specific Internet services does your agency provide?

1 = General Advertising 2 = Marketing 3 = Public Relations 4 = Web Site Design 5 = Web Site Maintenance 6 = Web Media Planning 7 = Personal Selling 8 = Other:

32. What percentage of your agency billings can be attributed to Internet

advertising?

1 = 0% 2 = 1 – 10% 3 = 11 – 20% 4 = 21 – 30% 5 = 31 – 40% 6 = 41 – 50% 7 = 51 – 60% 8 = 61 – 70% 9 = 71 – 80% 10 = 81 – 90% 11 = 91% +

33. How long has your agency been providing Internet advertising services?

1 = < 6 months 2 = 6 months < 1 year 3 = 1 year < 2 years 4 = 2 years < 3 years 5 = 3 years < 5 years 6 = 5 years +

APPENDIX C

163

34. What agency services do you offer to clients? Please click on all applicable

responses.

1 = General Advertising 2 = Marketing 3 = Public Relations

4 = Sales Promotion

5 = Telemarketing

6 = Market Research

7 = Internet Advertising

8 = Relationship Marketing

9 = Personal Selling

35. In terms of agency billings, please click on all services utilised by:

a) Your largest client:

1 = General Advertising 2 = Marketing 3 = Public Relations 4 = Sales Promotion 5 = Telemarketing 6 = Market Research 7 = Internet Advertising 8 = Relationship Marketing 9 = Personal Selling

b) Your second largest client:


c) Your third largest client:

1 = General Advertising 2 = Marketing 3 = Public Relations

4 = Sales Promotion

5 = Telemarketing

6 = Market Research

7 = Internet Advertising

8 = Relationship Marketing

9 = Personal Selling

APPENDIX C

164

36. Does your agency perceive that the Internet can add value to your clients'

existing promotional mix?

1 = Yes 2 = No

37. Do your clients perceive the Internet to be a valuable promotional tool?

1 = Yes 2 = No - SKIP TO QU. 40

38. What percentage (%) of your clients do you estimate perceive the Internet as a

valuable promotional tool?

1 = < 25% 2 = 25 – 49% 3 = 50 – 74% 4 = 75% +

39. Is the percentage (%) of your agency's clients who perceive the Internet as a

valuable promotional tool:

1 = Less than your agency’s expectations 2 = Equal to your agency’s expectations 3 = Greater than your agency’s expectations

40. What industry sectors do you feel would be most suitable for Internet

advertising? Please click on all that apply.

1 = Agricultural products / services

2 = Banking / financial services

3 = Construction

4 = Durable consumer goods

5 = Educational services

6 = Engineering

7 = Entertainment

8 = Food and Beverage

9 = Forestry

10 = Hi-technology goods

11 = Hospitality

12 = Information technology / Software products

13 = Mechanical / trade

14 = Medical

15 = Personal services (eg, hairdressing, lawn mowing)

APPENDIX C

165

16 = Pharmaceuticals – NOT VALID RESPONSE –

coding errors

17 = Public sector (government)

18 = Telecommunications products / services

19 = Tourism / travel

20 = Transportation

21 = Other:

41. Have you recently pitched Internet advertising to any of your clients?

1 = Yes


42. In what industry sectors were these clients who received an Internet

advertising pitch?

1 = Agricultural products / services

2 = Banking / financial services

3 = Construction

4 = Durable consumer goods

5 = Educational services

6 = Engineering

7 = Entertainment

8 = Food and Beverage

9 = Forestry

10 = Hi-technology goods

11 = Hospitality

12 = Information technology / Software products

13 = Mechanical / trade

14 = Medical

15 = Personal services (eg, hairdressing, lawn mowing)

16 = Pharmaceuticals – NOT VALID RESPONSE –

coding errors

17 = Public sector (government)

18 = Telecommunications products / services

19 = Tourism / travel

20 = Transportation

21 = Other:

43. How receptive were your clients to the Internet advertising pitch? QUESTION

NOT VALID 1 = Highly unreceptive

2 = Unreceptive

3 = Receptive 4 = Highly receptive

APPENDIX C

166

SECTION C:

44. Number of agency employees:

45. Number of client accounts:

46. In terms of agency billings please list your three largest client accounts and

their contact details:

Largest client account:

Contact Person:

Contact Telephone Number:

Contact Email Address:

Second largest client account:

Contact Person:



Third largest client account:

Contact Person:



47. What proportion of your agency's billings are derived from your top three

client accounts?

1 = < 20 % 2 = 20 - 39% 3 = 40 - 59% 4 = 60 - 79% 5 = 80% +

APPENDIX C

167

48. From this overall agency billings total, how much does each of your top three

client accounts contribute individually:

48a) Agency's largest client account:

48b) Agency's second largest client account:

48c) Agency's third largest client account:

1 = < 10 %

2 = 10 – 19 % 3 = 20 – 29 % 4 = 30 – 39 % 5 = 40 – 49 % 6 = 50 – 59 % 7 = 60 – 69 % 8 = 70 – 79 % 9 = 80 – 89 % 10 = 90 % +

49. What is your agency's view on Internet advertising? Please comment:

168

APPENDIX D

Survey coding for client questionnaire

APPENDIX D

169

CLIENT SURVEY CODING

SECTION A:

FOR ALL QUESTIONS 1 – 26:

1 = Strongly Disagree

2 = Disagree

3 = Agree

4 = Strongly Agree

5 = No Opinion

1. Excellent advertising agencies will have modern-looking equipment.

2. Excellent advertising agencies will give clients individual attention.

3. When excellent advertising agencies promise to do something by a certain

time, they will do so.

4. Account representatives of excellent advertising agencies will give prompt

Internet advertising service to clients.

5. The account representatives of excellent advertising agencies will understand

their client's specific needs with regard to advertising on the Internet.

6. Employees of excellent advertising agencies will be neat appearing.

7. Account representatives of excellent advertising agencies will never be too

busy to respond to client requests.

8. Excellent advertising agencies will have account representatives who give

clients personal attention.

9. Account representatives of excellent advertising agencies will be consistently

courteous with clients.

APPENDIX D

170

10. The physical facilities at excellent advertising agencies will be visually

appealing.

11. When clients have a problem, excellent advertising agencies will show a

sincere interest in solving the problem.

12. Account representatives of excellent advertising agencies will have the

knowledge to answer client questions with regard to Internet advertising and

promotional activities.

13. Excellent advertising agencies will have the client's best interests at heart.

14. Excellent advertising agencies will have top of the line computer hardware and

software for Internet use.

15. Excellent advertising agencies will perform services related to advertising on

the Internet right the first time.

16. Excellent advertising agencies will have operating hours convenient to all their

clients.

17. Materials associated with the Internet / web site design services will be visually

appealing in an excellent advertising agency.

18. When clients have a problem related to advertising on the Internet, excellent

advertising account representatives will work effectively and efficiently

towards solving the client's problem.

19. Excellent advertising account representatives will provide clients with

comprehensive background research on their strategies for advertising on the

Internet.

20. Account representatives of excellent advertising agencies will always be willing

to help clients to understand their strategies for advertising on the Internet

and the effectiveness of the Internet campaign.

21. Clients of excellent advertising agencies will feel safe in their transactions.

22. Excellent advertising account representatives will endeavour to make their

clients feel safe in their product / service investments with regard to

advertising on the Internet.

APPENDIX D

171

23. Excellent advertising agencies will insist on error-free records.

24. The behaviour of account representatives of excellent advertising agencies will

instil confidence in clients.

25. Excellent advertising agencies will provide their services at the time they

promise to do so.

26. Account representatives of excellent advertising agencies will tell their clients

exactly when services will be performed.

SECTION B:

27. Does your company use the Internet to promote and/or sell your products or

services?


28. What forms of the Internet does your company utilize? Please click on the

appropriate response/s.

1 = World Wide Web 2 = E-mail 3 = Internet relay chat 4 = Newsgroups 5 = Mailing lists 6 = Discussion groups

29. Who is responsible for developing your Internet site or Internet advertising?

Please click on the appropriate response.

1 = Your corporate advertising agency 2 = Internet Advertising Specialist 3 = Graphic Design House 4 = In House 5 = Other

APPENDIX D

172

30. Who is responsible for maintaining your Internet site or Internet advertising?

Please click on the appropriate response.

1 = Your corporate advertising agency 2 = Internet Advertising Specialist 3 = Graphic Design House 4 = In House 5 = Other

31. Can you determine whether your Internet advertising efforts have contributed

to sales?


32. Approximately what percentage of your sales can be attributed to the use of

Internet advertising?

CODING ERRORS ON # 7, #8 AND #9

1 = < 10 % 2 = 10 – 19 % 3 = 20 – 29 % 4 = 30 – 39 % 5 = 40 – 49 % 6 = 50 – 59 % 6 = 60 – 69 % 7 = 70 – 79 % 8 = 80 – 89 % 10 = 90 % +

33. How long has your product / service been online?


34. Who provides your company with the following specific Internet functions?

34a) Developing Advertising Strategies

34b) Developing Marketing Strategies 1 = In House

34c) Developing Public Relations Strategies 2 = Ad Agency

34d) Providing Personal Selling Opportunities 3 = Internet

34e) Web Site Design Designer

34f) Web Site Maintenance 4 = Other

34g) Web Media Planning

APPENDIX D

173

35. Does your company perceive that the Internet can add value to your existing

promotional mix?

1 = Yes 2 = No

36. Does your company’s advertising agency perceive the Internet to be a valuable

promotional tool?

1 = Yes 2 = No

SECTION C:

37. Please indicate the number of employees at your company? ________

38. How long has your company been working with your current advertising

agency?


39. Click on all promotional activities used by your company: 1 = General Advertising 2 = Marketing 3 = Public Relations 4 = Sales Promotion 5 = Telemarketing 6 = Market Research 7 = Internet Advertising 8 = Relationship Marketing 9 = Personal Selling

APPENDIX D

174

40. Click on the activities your advertising agency handles for your company:


41. How would you rate your advertising agency on the following criteria, please

click on the most applicable response:

41a) Overall Creative:

1 = Poor 2 = Below Average 3 = Average 4 = Above Average 5 = Excellent

41b) Task Performance: completing tasks in a timely fashion:


41c) Value for dollars spent:


42. What is your company’s view of the Internet as a promotional tool?

175

APPENDIX E

Pre-survey notification

APPENDIX E

176

Dear Colleague,

I am writing to seek your assistance with a thesis that one of our Account Management staff, Jennifer Doig is completing as part of her Masters of Business (Research) degree here in Brisbane, Australia, at the local Queensland University of Technology.

Jenny will be contacting you via email in the next day or so. You will see that she is hoping to contact three of your clients as well as someone suitable in your agency as part of a survey which will be conducted via the Internet. I would greatly appreciate any assistance you can give Jenny and we look forward to sharing the results of her survey with you all in due course.

Please do not hesitate to contact me if you have any queries or concerns regarding this request. Best regards, Xxxxx Managing Director

177

APPENDIX F

Email call to participate – Agency

APPENDIX F

178

Dear Managing Director / General Manager,

I am an employee of …. Brisbane pursuing my Masters of Business (Research) degree at

the Queensland University of Technology, Brisbane. My research thesis project

examines the potential gaps that might exist between the perceptions held by clients and

advertising agencies, regarding the value of Internet advertising.

I am sure that you’re well aware of the potential of the Internet as a new communications

medium for the advertising industry. In 1998 US online advertising revenue grew by

112%. By the end of 1999 it is estimated to approach $2 billion and with Internet traffic

continuing to increase, online ad spending in the US is predicted to reach $32 billion in

2005. On a worldwide scale Activmedia predicts ecommerce will generate US$95 billion

in revenue by the end of 1999. It is becoming vital for advertising agencies to understand

this new medium and more importantly what our clients think about this new medium.

The theoretical foundation of my research is built on the marketing literature dealing with

the gaps between expectations and perceptions of service quality held by companies and

their clients. To date no one has applied this research approach to advertising agency /

client cyber advertising.

In order to measure the perceived value added created by Internet advertising I am

surveying selected ….. advertising agencies, including your agency and three of each

agency’s leading clients. As part of my survey I would like to contact your top three

leading clients and I would be grateful if you would please give me your approval by

completing and submitting the attached survey (via email) and by providing me with the

appropriate contact details for these clients (your agency’s client contact, e.g. the

Marketing Manager).

I expect to complete this research project by the end of 1999 and at the conclusion of this

survey you can indicate whether you would like a copy of the research findings emailed

to you.

Please click here to complete the survey: xxxxxxxxxxxxxxxxxxxxxxxxxxx If you have

any problems accessing this survey via the Internet, please contact me and I will arrange

for a copy of this survey to be sent to you via an alternative medium. All findings from

this survey will remain confidential to this agency network.

Please feel free to contact me should you wish to discuss this research project further.

Thank you for your time.

Yours sincerely,

Jennifer Doig

Email: xxxxxxxxxxxxx Work Telephone: xxxxxxxxxxxxxxx

Home Telephone: xxxxxxxxxxxxx Mobile Telephone: xxxxxxxxxxxxxxx

179

APPENDIX G

Letter of introduction from

Queensland University of Technology

Supervisor

APPENDIX G

180

181

APPENDIX H

Agency email reminder

APPENDIX H

182

183

APPENDIX I

Email call to participate – Clients

APPENDIX I

184

185

APPENDIX J

Procedures in managing surveys of

Agencies and Clients

APPENDIX J

186

The following reports on the process whereby the agency and client

questionnaires were dispersed to the sample groups and the efforts undertaken

in order ensure the collection of quality survey data.

Approximately three months after the first round of agency questionnaires were

sent out, the second stage of agency questionnaires were despatched to a wider

segment of the worldwide population (including all agencies within the worldwide

agency network, not just those in English speaking countries). The pre-survey

notification email for stage two of the agency questionnaire was sent out on 17th

February 2000 and the researcher’s call to participate email with the questionnaire

link, was sent out to round two agencies three working days later. Follow-up

reminder emails for stage two agencies began approximately two weeks after the

agency respondents received the questionnaire via email.

The agency questionnaire (refer to Appendix A) was continually sent out to

agency respondents, asking for them to complete the questionnaire until the cut

off date of March 2000 for stage one agencies and May 2000 for all stage two

agencies. Regular persistent reminder emails were observed to result in a higher

(although staggered) questionnaire completion rate. The number of completed

agency questionnaires directly influenced the number of client contacts that could

be made, which ultimately affected the number of completed client

questionnaires. The following section outlines the client survey process.

Once the agency questionnaires were submitted to the online database, the client

questionnaire was sent out to the one, two or three client contacts as advised by

the agency respondent. In the case of the client surveys, a pre-survey email was

not required. Instead the first contact the researcher made with the client,

introduced the researcher, the aims of the research study, and outlined what was

requested of the client in order to complete the questionnaire (refer to Appendix B

for sample of client questionnaire). For those advertising agencies owned by the

worldwide network but who did not operate under the worldwide network’s

banner, the researcher’s association with the worldwide agency network was not

APPENDIX J

187

mentioned in contact with the client respondent, as the client respondent may not

have been aware of their agency’s association with the worldwide agency

network.

All client questionnaires were sent out in a staggered order, based on when the

agencies provided their client contact details. This staggered survey distribution

allowed the client survey responses to be gathered more quickly, as opposed to

holding up the client survey data gathering process, by waiting for all agencies to

respond to their questionnaire and provide their client contact details and then

send all of the client questionnaires out. This data collection procedure assisted in

increasing the response rate to the study.

188

APPENDIX K

Modified SERVQUAL questions

APPENDIX K

189

APPENDIX K

190

APPENDIX K

191

APPENDIX K

192

193

APPENDIX L

COUNTRIES FROM WHICH THE

SURVEY SAMPLE ORIGINATED

APPENDIX L

194

This research study received survey responses from

advertising agencies and clients in the following

countries:

•••• Australasia: Australia, Japan, Korea, New

Zealand, Singapore, Thailand,

Vietnam.

•••• European Union: Austria, Belarus, Belgium, Estonia,

Finland, Germany, Hungary, Ireland,

Italy, Latvia, Lithuania, Netherlands,

Norway, Poland, Portugal, Republic

of Russia, Romania, Sweden,

Switzerland, United Kingdom.

•••• Middle East and Africa: Cyprus, Egypt, India, Israel,

Jordan, Mexico, South Africa,

Sultanate of Oman.

•••• United States: Chicago, Honolulu, New York,

Seattle, Texas.

•••• Latin America: Brazil, Chile, Colombia, Costa Rica,

Dominican Republic, El Salvador,

Guatemala, Honduras, Nicaragua,

Peru, Republic of Panama,

Venezuela.

- Canada: Toronto, Toronto Ontario, Victoria.

195

APPENDIX M

Descriptive statistics – Figure 4.1

APPENDIX M

196

APPENDIX M

197

APPENDIX M

198

199

APPENDIX N

Descriptive statistics –Agencies who have

recently pitched Internet advertising

200

APPENDIX O

Descriptive statistics - Figure 4.2

APPENDIX O

201

202

APPENDIX P

Descriptive statistics - Figure 4.3

APPENDIX P

203

204

APPENDIX Q

Descriptive statistics – Analysis of client

Internet use contributing to sales

205

APPENDIX R

ANOVA of Internet use and non-use

APPENDIX R

206

A comparison of client’s use and non-use of

the Internet

12 3.2083 .44167 .12750 2.9277 3.4890 2.33 4.00

15 3.1111 .64139 .16561 2.7559 3.4663 1.75 4.00

19 3.0526 .46829 .10743 2.8269 3.2783 2.50 4.00

12 3.1250 .56909 .16428 2.7634 3.4866 1.75 4.00

58 3.1149 .52306 .06868 2.9774 3.2525 1.75 4.00

12 3.5097 .29682 .08569 3.3211 3.6983 3.00 4.00

15 3.5967 .51702 .13349 3.3104 3.8830 2.00 4.00

19 3.6000 .36968 .08481 3.4218 3.7782 3.00 4.00

12 3.6750 .23789 .06867 3.5239 3.8261 3.20 4.00

58 3.5960 .37366 .04906 3.4977 3.6942 2.00 4.00

12 3.5069 .39482 .11397 3.2561 3.7578 3.00 4.00

15 3.4667 .52497 .13555 3.1759 3.7574 2.00 4.00

19 3.4781 .44604 .10233 3.2631 3.6931 2.25 4.00

12 3.6250 .37689 .10880 3.3855 3.8645 3.00 4.00

58 3.5115 .43776 .05748 3.3964 3.6266 2.00 4.00

12 3.3625 .27396 .07909 3.1884 3.5366 3.00 3.80

15 3.3967 .40903 .10561 3.1702 3.6232 2.40 4.00

19 3.3921 .46793 .10735 3.1666 3.6176 2.60 4.00

12 3.6569 .27711 .08000 3.4809 3.8330 3.25 4.00

58 3.4420 .38983 .05119 3.3395 3.5445 2.40 4.00

12 3.6458 .35127 .10140 3.4226 3.8690 2.80 4.00

15 3.6100 .38739 .10002 3.3955 3.8245 2.60 4.00

19 3.6316 .34165 .07838 3.4669 3.7962 3.00 4.00

12 3.7125 .19786 .05712 3.5868 3.8382 3.40 4.00

58 3.6457 .32623 .04284 3.5599 3.7315 2.60 4.00

non-internet users

www only

email-based

interactive

Total

non-internet users

www only

email-based

interactive

Total

non-internet users

www only

email-based

interactive

Total

non-internet users

www only

email-based

interactive

Total

non-internet users

www only

email-based

interactive

Total

tangibles

reliabilty

responsive

assurance

empathy

N Mean Std. Deviation Std. Error Lower Bound Upper Bound

95% Confidence Interval for

Mean

Minimum Maximum

207

APPENDIX S

Qualitative statements – Agency respondents

APPENDIX S

208

APPENDIX S

209

APPENDIX S

210

APPENDIX S

211

APPENDIX S

212

213

APPENDIX T

Qualitative statements – Client respondents

APPENDIX T

214

CLIENT COMMENTS – Question 42

CLIENT LOCATION: COMMENTS:

South Africa Has tremendous potential in terms of awareness, exposure

etc, but not so much in terms of direct selling. We need our

customers to visit our petrol forecourts. We will not be able

to sell fuel over the internet. Thanks.

Johannesburg, South Africa Compaq's mission is to be the world's leading Internet &

Computing Partner. The internet is a VITAL promotional tool

in making this happen.

United States As part of the marketing mix the internet is used primarily to

facilitate those consumers who are more curious about our

brand and wish to have a more "personal" relationship with

the brand.

Toronto, Canada A huge opportunity that must we must be ready to capitalize

on.

South Africa Incredible tool - not sure of how to exploit it to the fullest.

Transition of physical bricks and mortar environment into the

online arena is uncertain from a strategic platform. Feel that

it is imperative to have a comprehensive strategy before just

going online for the sake of it. Included in this strategy is the

marketing rollout for such an initiative.

Houston, Texas Because the Internet offers the ability to blend brand and

demand, it is an essential component of the marketing mix

and should, over time, continue to grow in its importance as

a promotional tool.

Brisbane, Australia

It has limited possibilities as a source of competitive

advantage but we will need to develop our connectedness

as more consumers' come on line. This "connectedness will

allow us to correspond with consumers and will be a cost of

staying in the game in the future.

Dominican Republic We think that Internet is a special tool that provides to our

clients fulltime access, and unlimited ways for promote our

products.

APPENDIX T

215


Dominican Republic Is an important tool, but depends a lot in the kind of product or

market where you are working up.

Australia High potential over time.

Vilnius, Lithuania Excellent when used properly, with skill and knowledge.

Guatemala It is the most important tool at this time. Sales will depend on it.

Cairo, Egypt "Coming soon" in the essential zone of marketing tools. We are

just beginning to blend in, late but ahead of our competition

relative to our country.

Peru In Clorox, the internet web site is used as a corporate tool.

Subsidiaries do not have web sites on their own.

Peru The road to future and better deals!

MEXICO Our business model depends 100% on clients buying internet

advertising on our website. The internet as a tool is a very cost

efficient way to reach out to customers vs. offline advertising,

which is more expensive and less flexible. Production cost for

developing an online ad campaign is minimal compared to

those associated in offline advertising (TV, radio, etc) and the

interaction with the user in an online promotion is

instantaneous.

Dominican Republic * More Clients * Hi Tec Clients.

United States Excellent media.

United States Not cost efficient at this time, nor is there any evidence of its

effectiveness in our category.

Guatemala In Guatemala, the Internet is a promotional tool the recently

commercialisation. And the objective group don’t have internet

services (a few people have Internet service).

Hungary Internet is a good tool to promote McDonald's image, provide

information on the company and make it more local for our

customers. It is one of the best tools to communicate to more

people at a cheaper price.

Italy Very important for the future.

APPENDIX T

216


Muscat, Sultanate of

Oman

Great potential for creating awareness to a mass audience, but

we do not see direct sales eventuating as our business definitely

needs a personal interface.

Lima Peru Could be very effective tool to address male and kids. Also could

be fun to use.

Stuttgart, Germany The Internet has high potential as a promotional tool, but is not

seen as a replacement for traditional media.

Honduras Very Useful

Stockholm, Sweden The Internet and our web site will be one of the most important

channels for marketing communication, sales and costumer

relation.

Portugal No doubt the Internet is the new channel to promote and sell

goods and services: it's fast, always having all the news updated,

and develops individual contact which is always the best way of

using human emotions at its best.

Brazil It's getting stronger day after day and you have to be in this

"channel", even the results will appear only in a couple of years.

It's better now for the image than for the sales effectiveness.

HUNGARY It will be more and more important or even essential. We would

more focus on Internet for different specific point of views: to

intent to develop sales possibilities via Internet, better

communication for users, services for users and non-users, more

interactive connection to be more updated, interesting, known,

etc. Give info about company's life.

Duesseldorf, Germany Great opportunity, have to understand effectiveness and

efficiency better.

Dublin, Ireland We are a mobile network operator and the convergence of

internet and mobile is driving our business. We have recently

become an ISP and mobile portal so the internet is now core

business to us. We will be using our portal to sell and self serve

numerous products and services to existing customers. We will

be relying on several revenue streams from the internet to deliver

our company wide goals.

APPENDIX T

217


London, United Kingdom Excellent to build a corporate presence and consumer

relationship via service, information and connectivity Excellent to

build brand experiences Excellent to create revenue opportunities

to sell direct to consumer; provide services on spares/refills.

Germany In our business e-commerce is not possible. The Internet can

only support a promotion.

Sydney, Australia Untapped, but has to be used in conjunction with mainstream

media.

Managua, Nicaragua. They don’t know much about internet.

Vietnam The beer market is not there yet. Waste of time and money.

Bucharest Not yet fully understood.

Romania Interesting, but it is not so acknowledged in Romania.

VIETNAM Currently, not too promising in Vietnam. Low computer ownership

and internet usage.

Documents

Advertising and the Internet · advertising agency will need to change along with the adoption and usage of this new interactive media channel. Agencies are now being forced to consider