How can digital agencies address emerging marketing technologies to
gain a competitive advantage?
Kilian Johannes Dreher Student-ID: 116597
Copenhagen Business School
MSc in Business Administration and E-Business Master thesis
Supervised by Henrik Johannsen Duus Number of Pages: 74
Number of Characters: 132,345 Hand-in date:
16th September 2019
Abstract
Digital agencies are faced with emerging marketing technologies that facilitate or even automize many tasks related to their service offerings. For the author of this thesis, MarTech is an exciting area to be involved with since it poses new opportunities and challenges within his role as the owner of the digital agency Cucumba IVS. However, the mutual effects of creative industries and marketing technologies have been poorly researched. This study, hence, aims at filling this gap by providing a concept designed for digital agencies to exploit new technologies and strengthen their role in creative industries. Building on existing trend reports on marketing technology, it asks: How can digital agencies address emerging marketing technologies to gain a competitive advantage? In this context, MarTech is defined as the implementation of technology platforms designed to achieve marketing and commercial objectives. It should be further investigated if a technological innovation like MarTech reveals a new chance to gain a competitive advantage within creative industries.
Based on a review of the literature on creative industries and marketing technology a general knowledge base should established and then tested through an iterative design process. The corresponding double diamond process included in-depth interviews with clients and business partners of the researched company. Analysis of the responses demonstrated that digital agencies lack in experience to sufficiently support marketers with the choice and implementation of MarTech. The results indicate that digital agencies should focus on strategic advice, whereas the execution is left to marketers.
Keywords: Digital Agency, MarTech, Design Thinking, Double Diamond, Entrepreneurship
Acknowledgement
The journey of writing this thesis has been challenging and inspiring. Throughout the process of this thesis, I have received overwhelming support and encouragement, which I am truly grateful for. I especially would like to thank my supervisor Henrik Johannsen Duus for incredible knowledgeable and professional guidance. Henrik helped me open my eyes to new ways and guided me when I was lost in the process. I would furthermore like to thank all of the research participants for their contribution to this master thesis.
Moreover, I send my warmest thoughts to my friends and colleagues at Vertical Strategy, who have been encouraging me and kept me happy throughout this whole period. Lastly, I want to especially thank my parents for supporting me in my effort to receive my master’s degree and empowering me to pursue my passion.
Table of content
ABSTRACT ... 1
ACKNOWLEDGEMENT ... 2
LIST OF FIGURES ... 5
LIST OF TABLES ... 5
LIST OF ABBREVIATIONS ... 6
1 INTRODUCTION ... 7
1.1 BACKGROUND ... 7
1.2 PROBLEM IDENTIFICATION ... 8
1.3 PROBLEM FORMULATION ... 9
1.4 SCOPE AND DELIMITATION ... 11
1.5 CHOICE OF METHODS ... 11
1.6 CHOICE OF THEORY ... 12
1.7 STRUCTURE ... 12
1.8 KEY CONCEPTS ... 14
2 METHODOLOGY ... 17
2.1 RESEARCH PHILOSOPHY ... 18
2.2 RESEARCH APPROACH ... 19
2.3 RESEARCH METHOD ... 21
2.4 RESEARCH STRATEGY ... 24
2.4.1 Primary Data ... 25
2.4.2 Secondary Data ... 30
2.5 PURPOSE OF RESEARCH ... 31
3 THEORY ... 32
3.1 THEORETICAL BACKGROUND CREATIVE INDUSTRIES ... 32
3.2 THEORETICAL BACKGROUND MARTECH ... 35
3.3 THEORY DEVELOPMENT CORPORATE STRATEGY ... 41
3.3.1 The Right Approach to Strategy ... 42
3.3.2 Business Model Innovation ... 44
3.3.3 Design Thinking ... 45
4 SITUATION ... 51
5 ANALYSIS ... 54
5.1 COLLABORATE ... 55
5.1.1 Personas ... 55
5.1.2 Themes and Patterns ... 56
5.1.3 Pains ... 56
5.1.4 Gains ... 58
5.1.5 Reality ... 59
5.1.6 Implications ... 59
5.2 SOLUTION FIT ... 60
5.2.1 Research Partners ... 61
5.2.2 Impact of Marketing Technology ... 62
5.2.3 Ideate ... 63
5.2.4 Prioritize and Conceptualize ... 64
6 DISCUSSION ... 66
6.1 THEORETICAL CONTRIBUTIONS ... 67
6.2 PRACTICAL RELEVANCE ... 68
6.3 LIMITATIONS ... 69
6.4 FUTURE RESEARCH ... 72
7 CONCLUSION ... 74 REFERENCES ... I APPENDICES ... XI
APPENDIX A:BUSINESS MODEL CANVAS BY TEECE,OSTERWALDER AND PIGNEUR (2010) ... XI APPENDIX B:ILLUSTRATION OF THE STAKEHOLDER MAPS ... XII APPENDIX C:OVERALL PROJECT BRIEF FOR THE DOUBLE DIAMOND DESIGN PROCESS ... XIII APPENDIX D:TRANSCRIPT –USER INTERVIEW 1-JIYAN ... XIV APPENDIX E:TRANSCRIPT –USER INTERVIEW 2–PIA ... XXII APPENDIX F:TRANSCRIPT –USER INTERVIEW 3–MARIA ... XXXVI APPENDIX G:TRANSCRIPT –IDEATION 1–PAUL ... XLV APPENDIX H:TRANSCRIPT –IDEATION 2–MICHAEL ... LV APPENDIX I:TRANSCRIPT –IDEATION 3–ONUR ... LXVII
List of figures
FIGURE 1NUMBER OF MARKETING TECHNOLOGY COMPANIES,2011-2018(NO DATA IN 2013) ... 9
FIGURE 2ILLUSTRATION OF THE RESEARCH’S STRUCTURE ... 14
FIGURE 3RESEARCH ONION ACCORDING TO SAUNDERS,LEWIS AND THORNHILL (2016) ... 17
FIGURE 5THE DOUBLE DIAMOND ACCORDING TO THE BRITISH DESIGN COUNCIL (2005) ... 24
FIGURE 6PIE CHART PORTRAYING THE NUMBER OF MARKETING TECHNOLOGY COMPANIES CATEGORIZED BY SECTORS (2011 AND 2019 COMPARED) ... 38
FIGURE 7THE STRATEGY PALETTE ACCORDING TO BCG(REEVES,HAANÆS AND SINHA,2015) ... 43
FIGURE 8ADAPTED DOUBLE DIAMOND DESIGN PROCESS ... 48
List of tables
TABLE 1COMMON DESIGN THINKING PROCESSES ... 47TABLE 2PRIORITIZED IDEAS WITH DESCRIPTION ... 65
List of abbreviations
B2B Business to Business
B2C Business to Consumer
BMI Business Model Innovation
CIO Chief Information Officer
CMO Chief Marketing Officer
CMS Content Management System
DCMS Department for Culture, Media and Sport
DD Double Diamond
GLC Greater London Council
IT Information Technology
MarTech Marketing Technology
MVP Minimum Viable Product
SEM Search Engine Marketing
SEO Search Engine Optimization
SMEs Small- and Medium-sized Enterprises
1 Introduction
1.1 Background
MarTech, a portmanteau combining the words 'marketing' and 'technology', describes the implementation of technology platforms designed to achieve marketing and commercial objectives. These tools allow marketers to manage their marketing and commercial activities while improving the relationship between a company and its customers (Patrutiu Baltes, 2017). It is achieved through new technologies that facilitate and accelerate tasks such as web development, search engine optimization (SEO), performance tracking and project management.
For the author of this thesis, MarTech is an exciting area to be involved with since it poses new opportunities and challenges within his role as the owner of a digital agency.
Cucumba IVS is a digital agency offering digital marketing services to small- and medium-sized enterprises (SMEs). During the venturing project, the founder experienced that innovations and technologies increase the threat of substitutes in the competitive environment of a digital agency. These innovations around MarTech might facilitate traditional agency tasks to the extent that these services will not require the expertise of agencies anymore. Therefore, MarTech might significantly harm the core business of the researched company as well as other digital agencies.
Beyond evolving MarTechs as a substitute for agency services, we also observe an intense competition in creative industries driven by a great variety of agencies who offer a wide range of services. From the perspective of a digital agency, this competition aggravates the acquisition of new clients. Hence, changes in the industry require digital agencies to think differently to stay competitive. Correspondingly, Brad Jakeman, former president of PepsiCo, has been criticizing that most agencies are old-fashioned.
According to him, they have to adapt their agency model to address the marketers' needs for greater control, speed, efficiency, and flexibility (Whiteside, 2016).
Since this exposed the author to intense competition within the creative industry, it lies within his interest to make an in-depth examination of the current market conditions and to find out whether and how a digital agency can meet the high demands and rapid changes in the digital world. Moreover, the author’s professional environment, as a marketer at Vertical Strategy as well as the founder of the digital agency Cucumba IVS, gives access to not only general knowledge about digital innovations but also access to relevant networks considering the objectives of this research.1
Given that, this research aims at refining these insights from an entrepreneurial as well as a corporate perspective to define what a digital agency's client needs and how those needs can be commercialized.
1.2 Problem Identification
Today's agencies reach from one-man outfits to 100-plus member agencies, from one domain specialists to all under one roof agencies and lastly from digital arms of a creative agency to that of a media agency (Manas, 2014). However, most agencies resemble in their service offering while trying to differentiate themselves through prestigious client lists and niche products (Marketline Industry Profile, 2019). This increasing similarity does not only enhance the rivalry among the industry but also aggravates the agency search of marketers.
Besides the competitive rivalry, the current business model of digital agencies could be harmed by an increasing threat of substitutes considering the exceptional growth in
1 Vertical Strategy is an innovation consultancy that enables large organizations to unlock new growth and flourish in the digital economy, by generating and testing user-focused concepts, which are then
MarTechs. As shown in Figure 1, the number of companies in this sector has increased by 27% from 2017 to 2018 (Brinker, 2018). Marketers are exposed to higher uncertainty about which to invest in and implement. In many cases, technology is outstripping the ability of marketers to adopt it because the pace of change on the software side is so much faster than the pace of change on the organizational and corporate side.
Consequently, marketers need to find new ways to facilitate their choice and implementation of MarTech keeping up the pace with rapidly changing technologies to ultimately stay competitive in creative industries.
Figure 1 Number of Marketing Technology Companies, 2011-2018 (no data in 2013)
1.3 Problem Formulation
Given the complexity within the business environment of digital agencies, we observe two main issues with MarTech from an agency perspective:
a) The increasing variety of providers impedes finding the optimal solution for clients.
b) Marketing technologies could seriously harm the business of digital agencies by substituting their work through tools that are innovative and more user-friendly diminishing the need for the expertise of agencies.
This field of study is exciting, because of the considerable tremendous growth in MarTech over the past years. Those massive transitions could potentially improve or even disrupt the business model of agencies as we know it. In a time of rapid change, this research aims to identify how digital agencies can identify their position in the complexity of the MarTech landscape to continue offering their clients the best solutions and ensure that MarTech is appropriately implemented and utilized in their client's business. Hence, this research paper does not only aim at exploring and analyzing general issues of digital agencies but also strives at designing a possible solution to address them. This leads to the guiding research question:
How can digital agencies address emerging marketing technologies to gain a competitive advantage?
This explorative research question is supported by three sub-questions which should collectively lead to an answer to the main question:
1. What is marketing technology?
2. What are the challenges and opportunities within the marketing technology industry?
3. Which theoretical framework should be chosen and why?
Given the research question and its sub-questions, the aim is to investigate how the young and thriving digital agency Cucumba IVS must adapt its deliverables within the complex business environment around MarTech in order to gain a competitive advantage.
1.4 Scope and Delimitation
Due to the prescribed time and length of this project, it was necessary to delimit the focus area of this thesis in a number of areas.
Other agencies are likely to face similar problems potentially increasing the generalization of the findings presented in this study. However, this study addresses to some extent the characteristics of the researched company. Therefore, conclusions drawn from this study should be considered carefully and might not apply to any digital agency.
Regarding the customer segments of digital agencies, this work will not be reduced to a specific industry, but instead deal exclusively with SMEs. This corresponds to the client base of Cucumba IVS, which is supposed to serve as a resource for interviews.
Considering this master thesis' qualitative research approach of learning, the researcher decided to conduct two successive loop iterations within the scope of the double diamond (DD) design process to achieve an appropriate validity within the scope of this paper. The population studied within the DD design process was delimited to three external business partners as well as three client representatives.
Lastly, this research focuses on a service innovation proceeding from the industry acceleration and the range of services offered by digital agencies. Other possible changes in the business model might include pricing strategies, higher education, marketing budgets, organization charts and career paths, which all should be excluded from this research.
1.5 Choice of Methods
Given the particular reference to an existing digital agency, this paper follows an action research strategy in order to enhance organizational learning and produce practical outcomes through identifying issues, planning action, taking action and evaluating
action (Saunders, Lewis and Thornhill, 2016). In order to enable rapid development and testing of novel ideas, a method commonly known in innovation practices was applied. This emergent process, the so-called double diamond, will be underpinned by data observed or collected directly from first-hand experience, field research and in- depth interviews with decision-makers at agencies as well as marketing strategists to represent the clients’ interests.
The use of primary data, as well as considerations, will be thoroughly described and separated into qualitative 1-1 in-depth interviews with clients and 1-1 ideation sessions with business partners. In addition, secondary data will be considered to develop a general knowledge base and to validate findings.
1.6 Choice of Theory
According to the influential work of Whetten (Whetten, 1989), a complete theory constitutes of four essential elements including 'what', 'how', 'why' and a fourth group of 'who', 'where' and 'when'. Given that, creative industries, marketing technology, and innovation strategies are the essential factors that must be logically considered as part of the explanation of how digital agencies can address emerging marketing technologies to gain a competitive advantage. This will allow us to find out whether others have asked similar questions to the proposed question. Through the study of similar research approaches, it should be understood in which context the problem was investigated and finally the research conducted. Hereby, the relevant concepts and variables that need to be tested within this research project should be determined.
With reference to the delimitations of this research paper, the theory will be narrowed down according to the above-mentioned scope and delimitations of the study.
1.7 Structure
According to Figure 2, this research project is conducted as follows. First of all, the foundation of the field of research is built by introducing the reader to the background
under which it takes place, the authors’ personal motivation for the research, the problem the author identifies formulated in the research question and its sub-questions, the delimitation of the scope of the research, the entailing choice of method and theory, and the key concepts underlying this research project. Second, in accordance with Saunders' Research Onion, the methodology and methods in order to answer the formulated research question will be chosen. Third, a comprehensive review of previous literature of creative industries, marketing technology, and innovation strategy will establish a general knowledge base as well as the theoretical framework of the design thinking methodology under which the later empirical investigation takes places.
Fourth, after the researched company is put into context, a successive presentation, analysis, and discussion of the empirical investigation will be portrayed pursuant to the chosen research approach. Fifth, the theoretical contributions, practical relevance, limitations of the study and implications for future research are presented. Lastly, the author summarizes the research findings and concludes by presenting a concept answering the formulated research question and its defined sub-questions.
Figure 2 Illustration of the research’s structure
1.8 Key Concepts
Before determining the research design and strategy of the thesis, the author defines certain concepts and terms that will be used recurrently during the study. Based on
previous studies and relevant literature about similar topics, four terms have been identified.
Digital Marketing
Digital marketing is a broad term that can be applied to any marketing aimed at consumers using digital channels (Tapp, Whitten and Housden, 2013). Despite digital solutions such as digital strategy and marketing campaigns, this thesis focuses on services related to coding, graphic design and user experience that combined often result in the launch of a website.
Digital Agency
Digital agencies are responsible for any actions regarding a company's visibility on the web. Together with the client, a digital agency can provide an idea, concept, development and finally the implementation of any digital solution presented on the web. For simplicity, the terms digital agency and digital marketing agency are used interchangeably.
Clients and Customers
In the context of this thesis, the term ‘client’ refers to any company that purchases or could potentially purchase one or more services offered by a digital agency to promote their business. While this work focuses on SMEs, there are no restrictions on whether they sell their products to consumers (B2C) or businesses (B2B). In that sense, the term ‘customer’ refers to the end consumer that purchases the products of the client.
Marketing Technology
Baltes (Patrutiu Baltes, 2017) defines marketing technology as the implementation of technology into a business to achieve marketing and/or commercial objectives.
Presenting the direct link between marketing, technology, and business, the author
applies the term to any activity that combines marketing objectives and technology to ultimately facilitate the marketing efforts of the clients in terms of investment in time and money. A detailed derivation of the term will be presented in chapter 3 Theory.
2 Methodology
Overview: The purpose of this chapter is to present the research methodology that is chosen to answer the research question and “transform it into a research project or plan that can then be carried out in practice by a researcher” (Given, 2008). As it can be seen in Figure XY, the structure follows the so-called research onion that was introduced by Saunders, Lewis, and Thornhill (Saunders, Lewis and Thornhill, 2016) to facilitate the decision-making process when designing a research project and help to keep methodological coherence throughout the research design. The specific rationales and implications corresponding to each layer of the research onion will be discussed in the following sub-chapters.
Figure 3 Research onion according to Saunders, Lewis and Thornhill (2016) Research Philosophy
• Social Constructionism
Research Approach
• Deductive with abductive element
Research Method
• Exploratory Analysis
• Enactive Research Approach
Research Techniques:
• Primary Data
• Data observed or collected directly from first hand
experience
• Double Diamond Design Process
• 1-1 in-depth interviews
• Secondary Data
• Industry Reports
• Trend Reports
2.1 Research Philosophy
To understand the methodology and methods underlying this research project, it is crucial, to begin with discussing the methodological position of the researcher. Every research project is based on certain assumptions about the nature of the social world and how we perceive it. A credible research philosophy clarifies the researcher's view of the world and facilitates the procedure of knowledge. The methodological position held by the author of this study is a determining factor for choices made in the following sub-chapters. In order to distinguish between individual research philosophies, we consider three different types of research assumptions: ontology, epistemology, and axiology (Saunders, Lewis and Thornhill, 2016). The ontology describes the nature of being and existence, answering the question “What is reality?”, thereby influencing the way we perceive our research objects. In entrepreneurial science, Johannisson (2011) emphasizes that digitalization, and its violent and increasingly complex nature, has moved the academic concern of ontology as the nature of being more to the nature of becoming. Ontology offers the possibility to account differences in individual contexts and experiences and might even enable a new understanding of the world while appreciating the capacity of humans to reflect, learn, and change. Nevertheless, when working with participants of this study and taking their opinions and ideas into account during the knowledge generation process, we assume that knowledge production and use have been democratized and the interests of the participants are subject to ethical fairness (Berg, 2001)
In addition to the three different types of research assumptions, Burrel and Morgan (1979) differentiate between a subjectivist and objectivist view. While subjectivism enhances the freedom of the researcher, so social reality is made from the cognition and resulting actions of social actors (Saunders, Lewis and Thornhill, 2016), (social) constructionism invites social interaction and unexpected external events to construct realities. In the case of entrepreneurship, social constructionism further emphasizes reality as consisting of chaos and uniqueness, but also relatively stable structures that
are connected to the actors who maintain these structures (Arbnor and Bjerke, 2011).
In the scope of this thesis, the author believes adopting a (social) constructionist view is most suitable in the study of entrepreneurship. First, we need to recognize the pre- conceptions of the author, since the outcome of the research inherently dependents on them. Secondly, entrepreneurship is about collaborative efforts, and the researcher should share knowledge with participants in the formulation of problems and solutions (Aagard Svensson and Nielsen, 2006). Lastly, it allows to continually revise the social reality, since each person experiences reality differently, meaning, there is no final entity called competitive advantage, but slightly different versions of competitive advantage, that are continually changing and perceived by different social actors.
It also derives from the wish to question the way digital agencies currently operate that the researcher investigates within the radical change perspective. Hence, the researcher is deliberately concerned about what is possible to ultimately change the organizational and social worlds (Burrel and Morgan, 1979). In an innovative knowledge creation process, the researcher intends not only to describe but also drive change (Arbnor and Bjerke, 2011). As mentioned, the researcher takes a critical perspective on organizational life from within a subjectivist ontology highlighting the importance of social construction, language, processes, and instability of structures and meaning of organizational realities (Saunders, Lewis and Thornhill, 2016).
2.2 Research Approach
In addition to the methodological position of the researcher, we need to clarify how we intend to develop theory. Generally speaking, we distinguish between two major approaches of reasoning: deduction and induction. An inductive approach starts by collecting data to explore a phenomenon resulting in the formulation of a theory. In contrast, a deduction is based on existing research; hence, the researcher uses data collection as a tool to test primarily developed hypotheses (Saunders, Lewis and Thornhill, 2016). As the deduction approach is characterized as a move from the general
to the particular, deductive reasoning intends to establish a theoretical framework to test the specific data gained from the research process against this base (Bryman and Bell, 2015; Flick, 2015). Consequently, deductive reasoning occurs when the conclusion is logically drawn from a series of premises or theories so that the conclusion is right when all the premises are true (Saunders, Lewis and Thornhill, 2016).
In this thesis, the deductive approach is chosen as an approach to establish a general knowledge and theory base. MarTech serves as the knowledge base of this thesis, whereas the DD design process provides the theoretical framework to test research data against the knowledge base. Therefore, the general literature provides first insights to address the specific research question: How can digital agencies address emerging marketing technologies to gain a competitive advantage?
Nevertheless, the researcher also added an abductive dimension to the research. Most entrepreneurial research tends to go back and forth rather than following a clear path.
This is often referred to as an exploratory data analysis where abduction is applied to generate testable new ideas or hypotheses (Yu, 1994). In exploratory data analysis, after observing surprising facts, they are monitored and selected by identifying themes and patterns among them. Ultimately, the most reasonable facts are ‘abducted’ and collected in a conceptual framework which is then tested through a continuous data collection. With regard to the entrepreneurial background of this research paper, it further intends to offer a practical outcome that should be developed through an iterative exploratory research approach. In order to address the goals of entrepreneurial research, Johannisson (2011) fills the gap between traditional methodological approaches and the lack of space towards a practical conclusion by adopting a process perspective on entrepreneurship - the so-called practice-theory. In contrary to traditional research approaches, practice-based research does not intend to build universally applicable frameworks, but to create practical wisdom helping to understand the strategy in practice (Whittington and Jarzabkowski, 2008). One way to develop knowledge that is appropriate for taking action is the practice of
‘analogizing’. Analogous reasoning activates previous experience and improvisation to apply the practical outcome to a particular situation in the venturing process of a company (Johannisson, 2018). It reveals the researcher as an experiential learner enhancing his insights into the research career. In the case of this research, the rationale for approaching the research question with analogous reasoning can be summarized in four significant statements:
1. Constant change requires to take action rather than a strategic and original solution.
2. Entrepreneurship is inherently collaborative and requires interaction with a network to solve problems.
3. The company being researched is in itself unique and in a concrete situation making it unfeasible to apply universal law.
4. Involving peers creates legitimacy and trust. Under the assumption that the business will be continued, the company will benefit from collaborative
problem-solving ultimately leading to a solution-oriented outcome as well as an established relation with peers, which is especially important in the early stage of a company (Stinchcombe, 2000).
On an analogous reasoning approach, this thesis utilizes existing research of the creative industries and marketing technology as a knowledge base to ideate and prioritize the results of an iterative research approach.
2.3 Research Method
The methodological choice relates to the nature of data that is collected and analyzed.
While quantitative research refers to data of numerical nature, qualitative research is based on non-numerical data (Saunders, Lewis and Thornhill, 2016). As discussed in chapter 2.1 Research Philosophy, we presume that knowledge is produced
collaboratively. Accordingly, the goal of this research is to solve a particular problem facing digital agencies. In collaboration with various participants of diverse experience and skills, the outcome of this research should have a tangible outcome that cannot only be applied to Cucumba IVS, but also to other digital agencies that are positioned in a comparable market environment and face similar problems. As outlined in chapter 2.2 Research Approach, current research is lacking in providing such a practical approach to marketing and entrepreneurship. This is due to the way marketing is taught and researched at most universities. The social scientist usually privileges a strategic approach to develop a theory that is in high accuracy (Whittington and Jarzabkowski, 2008). Within qualitative research, action research suggests a cyclic approach that is known as action research. Unlike many other research strategies, action research is "concerned with a systematic data collection and research, leading to action and change" (Bennett and Oliver, 1988). Action research is a viable and practical strategy that requires the active involvement of the researcher with the research participants, emerging theoretical conceptualization, ultimately building theory “moving through a cycle of extending-theory-to-action-to-critical-reflection-to- developing theory” (Eden and Huxham, 2006). In addition to how action research is practiced, social scientists have tried to develop a research methodology that is suitable for the purpose of entrepreneurship (Whittington and Jarzabkowski, 2008; Johannisson, 2011, 2018). In his work ‘Towards a practice theory of entrepreneuring’, Johannisson (2011) suggests an interactive way of field research that invites research subjects in a knowledge-creating process and proactively involves the researcher as a change agent of the processes and events being studied (Gummesson, 2005). More recently, Johannisson (2018) enhanced the knowledge-creating process integrating the identity of an entrepreneur with that of a researcher by involving the research in the actual practice of developing a company. As opposed to previous collaborative research approaches such as participative action research, action science, and engaged scholarship, the so-called enactive research is dominated by coordinated concrete action
rather than discourse and dialogue (Aagard Svensson and Nielsen, 2006; Van de Ven, 2007; Reason and Bradbury, 2008; Johannisson, 2018). Applying an enactive research approach requires the researcher to initiate and encourage change while simultaneously expanding his embodied knowledge. Boundaries between the researcher and his subject are dissolving, ultimately leading to a co-creation of knowledge from the researcher’s point of view. For instance, findings of one exploratory study that considers data from qualitative research, case study findings and existing literature show customer collaboration is increasingly important for service provision and innovation (Blazevic and Lievens, 2007). Hence, knowledge from customers is a fundamental source of competitive advantage for three main reasons:
1. Involving customers in the service design process does not only provide one- shot feedback of the service but instead leads to various innovation tasks.
2. Considering customers as active informers decreases the necessary amount of market research data (Blazevic and Lievens, 2007).
3. Latent needs can be inferred from dialogues between customers.
In addition to proven methods of entrepreneurial research, the author added a standard method known from innovation practices. Highlighting the importance of customer involvement, co-creation, and the engagement of the researcher within an iterative process, we apply the DD design process. The original DD, which can be seen in Figure 4, will be slightly adapted within the scope of this research project and further explained as part of the development of a theoretical framework in Theory.
Figure 4 The Double Diamond according to the British Design Council (2005)
2.4 Research Strategy
The research strategy presents the link between paradigms, precise approaches, and methods for collecting and evaluating empirical data (Denzin and Lincoln, 2018). Above that, it also portrays a concrete research plan, in terms of how the data will be collected in order to achieve the purpose of the project and answer the research question(s).
According to our research philosophy, we assume a nature of becoming and hereby appreciate the researcher’s preconceptions, encourage to develop actionable knowledge collaborating with research participants and finally continuously revise the social reality. As outlined previously, such (social) constructionist view incorporates with the methodological choice, which inevitably requires the researcher to participate in the research, but also to interact with research participants building actionable knowledge.
For improved validity of research, this thesis is based on a triangular research approach.
This implies a cross-checking in which the researcher collects data using different kinds of research techniques to improve the validity of the research. For the purpose of an
enactive research approach, it becomes increasingly important to not only triangulate considering existing literature (secondary data) but rather more by increasing the capacity of the acting system collecting new data (primary data). The growing capacity of the acting system is achieved by interacting with all sorts of people in a dialogue with difference, diversity, and incongruity (Reason and Bradbury, 2008). Given that, the following two sections elaborate on how a growing capacity of the acting system is achieved in practice, and second, explain how we will make use of existing literature as an additional tool during the triangulation process in enactive research.
2.4.1Primary Data
The answers are easy. Asking the right questions is hard.
– The Startup Owner's Manual by Blank and Dorf (2012)
Since an enactive approach requires the direct involvement of the company’s stakeholders, the primary data collection is based on in-depth interviews with decision- makers on the client-side as well as agency representatives. With reference to the number of subjects to be interviewed, three subjects of each group seemed to be sufficient in terms of answering the research question and still being able to conduct accurate analyses in the given time-frame (Brinkmann and Kvale, 2015). Furthermore, the goal of these interviews is to ascertain the current challenges the industry is facing, but also to ask the participants for their opinions and ideas on how to address the proclaimed issue in order to involve them in the process of problem-solving. While a questionnaire or survey would limit the project to a few questions, in-depth interviews offer the opportunity to address specific ideas and opinions that may arise during the conversation (Reason and Bradbury, 2008). The following sub-chapters portray the selection of participants, the interview guide, the situation of interviews and, lastly, how the interviews have been transcribed and coded.
Sampling and Recruitment of Participants
Before conducting the interviews, the selection of the right participants, also known as sampling, was crucial to ultimately be able to make the right conclusions representing a larger group than the relatively small sample group. While in quantitative research a sample group is selected based on the assumption that it mathematically represents a broader audience, sampling in qualitative research is often based on non-probability sampling (Berg, 2001). The rationale for choosing a limited selection of a quasi-random sample lies within the goal of this research to appreciate the uniqueness of the situation and understand the subjective views of the respondents. The efforts have been focused on two main groups capturing the two different perspectives of clients and agencies.
Furthermore, it was considered beneficial to select subjects that have already been available in the author’s personal network. Within the limited timeframe, only in this way, the researcher was able to build up sufficient trust with the participants and, thus, get profound and deep insights. According to existing literature, a trustful relationship is essential to collect rich data (Brinkmann and Kvale, 2015), meaning in our case to reach a deep understanding of the challenges, but also the opportunities MarTech portrays to the subjects. In order to locate relevant research participants within the personal network of the author, two different methods have been applied.
First, the search function within the social network LinkedIn, which is a platform dedicated to socializing with people to build your career, was used to look for people that are either strategic decision-makers at digital agencies or digital marketing experts at SMEs. Secondly, the author sent out generic emails asking former and current colleagues at various companies for help to connect with those two profiles.
Based on the criteria that interviewees should possess knowledge, opinions, and reflections on the subject of digital marketing and MarTechs’ roles and structure, the following people have been selected for the 1-1 in-depth interview.
With regard to the personal and professional network of the author and the company Cucumba IVS, the selected clients are based either in Germany or Denmark and have
been interviewed by focusing on their needs as well as their level of confidence implementing and utilizing technology as part of their digital marketing strategy. To ensure the anonymity of the participants and the confidentiality of their data, names of participants and company names have been changed and are only descriptive. The selected clients are all representatives of SMEs.
➢ Jiyan: Founder at Grade A Tutoring
➢ Pia: Head of Branding, Marketing & Communications at ABC Consulting
➢ Maria: Project Manager & Media Buyer at FUN Gambling
It also seemed to be advantageous to connect and exploit our insights to agencies that are in competition with Cucumba IVS (Hayes, 2002). Therefore, the author decided to approach decision-makers at several agencies in order to examine how they cope with the new MarTech entrants and how it influences their work and might even have led to a new service offering.
➢ Paul: Co-Founder and Branding Strategist at Groß & Tulpe
➢ Michael: Founder at Ad Factory
➢ Onur: Founder at itsfriday
Conducting the interviews
Having decided which groups may be relevant in order to answer the research question, the next step is to determine which type of interview will be the most adequate considering the purpose of research and research strategy (Saunders, Lewis and Thornhill, 2016). The most common way of collecting data in enactive research is interviewing. In contrast to traditional research, interviews in enactive research are often characterized by a rather informal conversation approach where the main goal is to discuss, share information and co-create a narrative about a particular experience, event or set of issues (Coghlan and Brydon-Miller, 2014). Moreover, a (social) constructionist view neglects objective neutrality and, correspondingly, in-depth
interviews encourage mutual understanding and intersubjective depth between the interviewer and the research subjects. Considering rapport and trust as increasingly important to get the most out of in-depth interviews, the aim was to create a rather casual than formal interview situation in a face-to-face setting. In cases where it was not possible to meet the research participants personally, a video call was considered as the second-best option to realize a setting considerable close to personal interaction.
Before the interview, the author made sure to brief the research participants about the topic and purpose of the research. First, the participants should have the relevant knowledge to answer questions within the area of digital marketing and MarTech.
Therefore, the author included the most fundamental questions in the brief to keep the focus on the essential questions that needed to be answered. Secondly, as confidentiality was considered as increasingly important when talking to decision-makers, the author explained prior to the interviews that they will be anonymized. During the brief, the interviewees were also asked where they feel most comfortable to be interviewed and if they require any prerequisites, such as a copy of the interview guide or a consent form, ahead of time. In the case of semi-structured interviews, the interview guide does not constitute of a predefined set of questions but leaves room for follow-up questions, ultimately getting in-depth insights into the subject’s perspective on the issue at hand.
Therefore, the interview guide was only divided into certain areas of interest to keep the guide as flexible and open as possible. Based on the research questions developed by the author, the guide was meant to help the interviewer to cover areas that speak back to those questions, creating research data in the process. All the interviews have been recorded via voice memos. This could, unfortunately, limit the natural and comfortable aim of the interviews but was necessary for the transcription of the interviews afterward.
During the interview with clients, the researcher was focused on client empathy to take a customer perspective ultimately capturing their needs. In contrast to that, the researcher enacts not as an interviewee but rather as an engaging, temporary member
of a community of practice during the interviews with agencies. Hereby, the author does not only remain as the entrepreneur of the venture but also becomes a part of the community to understand its basic norms and practices. According to an enactive research approach, the researcher turns into a fundamental source of insight (Johannisson, 2018).
After the interview, a follow-up mail was sent to the research participants recognizing the subject’s time, effort and knowledge sharing, and providing a detailed summary of what the author has heard to encourage the subjects to criticize and elaborate on it.
Hereby, introverts might be more willing to share their thoughts in writing once they have had the chance to reflect on it, while extroverts might have second thoughts and follow on observations.
Transcription and Coding
There are various strategies to transcribe and code interviews; some prefer to transcribe the interview word for word to allow coding of pauses, silences, awkward moments and laughter, in addition to the dialogue. Others, however, capture only what seems relevant and applicable to their own study. As mentioned earlier, the interviews have been recorded setting the focus on the conversation rather than making extensive notes.
The voice memos were then transcribed by the automatic transcription software Happy Scribe (Happy Scribe Ltd., 2019) and afterward manually revised to make sure that the transcription is accurate by correcting transcription errors. In a three-stage process, the transcripts have been coded to organize the data into smaller manageable chunks.
Firstly, for a preliminary review of data, any key moments where statements might be explored were highlighted and simple descriptions and classifications of the potential hypotheses and ideas were captured. Secondly, these broad themes are collapsed into descriptive codes to lastly develop analytical categories that take up issues around the venturing of a digital agency.
2.4.2Secondary Data
The researcher established a general knowledge base with an extensive literature review. Literature was found using several secondary databases, in particular, online databases, browsing and scanning secondary literature as well as conducting general internet searching. Hereby, databases such as CBS Library, Google Scholar, Sage, and EBSCO were used to obtain the relevant literature. Generally, the researcher preferred books and journal articles within the theory of creative industries and MarTech;
however, the currency of the topic required to rely on several web-based pieces of literature. In order to guarantee the relevance of the secondary literature, the researcher developed a directory where articles were ranked based on relevant keywords, year of publication, and the number of citations. The most important keywords hereby were,
‘creative industries’, ‘digital marketing’, ‘marketing technology’, ‘service innovation’,
‘competitive advantage’, and ‘agile strategy’. To structure the literature, the researcher used Mendeley, a reference management system that is complementary for CBS students.
Moreover, the primary purpose of the interviews was to interact with different people in a dialogue with difference, diversity, and incongruity, hence, the results of the in- depth interviews lead to a profound knowledge of personal experiences and the nature of the operating business rather than industry facts. Therefore, further secondary data in the form of trend reports as well as market and industry research were used to supplement the primary interview data. This was further analyzed to provide additional or different knowledge during the iterative process of the enactive research method, especially during the analysis of the business environment where facts are considered as more reliable than opinions based on personal experiences. Databases have been chosen carefully by relying on well-established general and industry-specific databases.
For this, data was obtained from the general information providers Compustat, Frost
& Sullivan, Statista and industry-specific trend reports by several consulting companies such as McKinsey, Deloitte, and BCG.
2.5 Purpose of Research
According to the research question, the purpose of this research project is to develop a concept that answers how digital agencies can address emerging marketing technologies to gain a competitive advantage. MarTech is an exciting field of research for several reasons; a) there is an distinct lack in research presenting an excellent opportunity to foster new insights and to shape an action plan from scratch; b) MarTech is developing at high pace making it cumbersome for digital agencies as well as clients to keep up with the broad range of services and successfully implement them into their traditional marketing methods calling for a new approach that enables both of them to meet the needs of the customers; c) even though digital agencies and MarTech companies are addressing similar clients, hence, are in direct competition, they both capture different capabilities that cannot easily be separated or even substituted. According to that, this research aims at testing the relevance of MarTech and developing an action plan that integrates MarTech into the business operation of digital agencies accordingly. It lies within the profound interest of the author to also include the clients themselves in the development of an action plan. While taking a customer-centric approach, novel ideas can be tested and validated to eliminate false assumptions early in the process.
Finally, actionable outcomes of this research project may include a new offering of digital agencies. For instance, digital agencies could possibly automize traditional marketing methods through MarTech or even offer their own new MarTech methods.
Moreover, we might conclude that MarTech and digital agencies should work closely together in the form of a joint venture or partnership. A possible idea could be that digital agencies focus on the conceptualization and pitching to clients while MarTech providers entirely focus on the implementation and technical part of digital marketing.
3 Theory
Overview: One primary purpose of scientific research is to observe patterns in the social world and associate these patterns with one another, ultimately “creating, examining and testing, and refining theory” (Berg, 2001). Accordingly, we define theory as a collective of statements or propositions that comprehensively describe different aspects and perspectives of the research spectrum. Various patterns, concepts, processes, relationships or events are used to explain the relationship between the research variables of creative industries and MarTech. The second part of this section presents the theoretical framework of the design thinking methodology the subsequent research of this master thesis is based on.
3.1 Theoretical background creative industries
As a digital marketing agency that focuses on individual creativity to generate and exploit intellectual property, Cucumba IVS operates within the scope of creative industries (Hartley et al., 2013a). In order to define the connection between the company and creative industries, we will consider the three main phases in the studies on creative industries. First, the development of the term cultural industry as a precursor of the creative industries, secondly the shift from cultural to the creative industry and lastly the theoretical field of the creative industries in the digital age are all mentionable phases in the development of today’s term and understanding of the creative industries.
Historically, the creative industries can be seen as a layer of the cultural industries, as they also depend heavily on creativity and create value from it. The term cultural industry originally evolved from the ideological critique of art and culture under industrial capitalism associated with the ‘Frankfurt School’. In the philosophical fragments by Adorno and Horkheimer the value of cultural products, such as music and art, was considered as the subjection of the economic value rather than aspects of aesthetics (Adorno and Horkheimer, 1947). Among other things, the commodification
of art and the sceptical attitude of the authors towards the, at the time, new media of radio and film led to criticizing the distribution of cultural products as an industry that is nothing more than an instrument of capitalism. While Adorno and Horkheimer picture the cultural industry as a powerful ideological and propaganda instrument imposing ideological control on the mass population (Hartley et al., 2013b), critiques of the Frankfurt School emphasize the possibility of cultural ideas to oppose the mainstream. Later, with the growing importance of culture as a site of economic development strategies, the Greater London Council (GLC) aimed for a redefinition that focuses on popular culture and media (Garnham, 1987). Accordingly, Garnham’s
‘Concepts of Culture’ was published as a pamphlet by the GLC putting the cultural industries on the political agenda of local government in London. Subsequently, the amount of research in the field of economics and business strategy addressing cultural industries increased significantly (Hirsch, 2000).
Despite the work of well-known researchers, the term ‘cultural industry’ gained popularity as policymakers realized that accompanying economic-productive mechanisms in creative work needed to be regulated. In Europe, this led to a policy that aimed at protecting the intellectual property of the authors, while at the same time, regulations in the US encouraged entrepreneurial interests. To some extent, these policy changes addressing creative work built the basis for creative industries. First, in 1997, the British Labour introduced the term ‘creative industries’ in order to describe the range of activities regarding arts and media that have formerly been covered in
‘cultural industries’. Policymakers were proposing this new classification hoping to encourage economic growth, employment and social cohesion in advanced countries (Mangematin, Sapsed and Schüßler, 2014). The Department for Culture, Media and Sport (DCMS) defined the creative industries as "those industries which have their origin in individual creativity, skill, and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”
(DCMS, 2001). This foundational definition included thirteen industry sectors as part
of the creative industry: advertising, architecture, art and antiques, computer games/leisure software, crafts, design, designer fashion, film and video, music, performing arts, publishing, software, television and radio (Hartley et al., 2013a).
Despite its controversies, this foundational demarcation of the field has been directional for the industry due to two main reasons. First, it acknowledges the economic value of culture, media, and design and secondly, it converges a couple of industries that have not yet been linked with each other. This allowed to appreciate the size of the rapidly growing creative sector and supported to move the perception of the industry as non- commercial to high-tech and commercial (Hartley et al., 2013a).
Since the initial definition of ‘creatives industries’, the industry has grown enormously shifting creative products from a luxury to a necessity in all industries (Mangematin, Sapsed and Schüßler, 2014). Today’s digitized companies are exceedingly large compared to usual sizes in former cultural industries, and beyond that, they have become multimedia subjects being exposed to a wide range of distribution. Hence, companies are not only faced with the decision of whether to sell their products online or offline, but they are faced with a wide variety of digital platforms, such as Facebook, Amazon or Instagram, enabling them to connect with their customers on various channels. Moreover, such digital platforms grant customers with immediate, free access to information. Besides an increased pace at which information is shared across the web, this immediate access has also reduced the product life-cycle of media products forcing creative workers to experiment more to continue to deliver outstanding and original products. Accordingly, Mangematin, Sapsed, and Schüßler (2014) claim that no other industry has felt the impact of digitalization as profoundly as the creative industry. Whereas Schumpeter argued that creative innovation by entrepreneurs eventually generates economic growth (Winter, 2006), Teece argues that “technological innovation without a commercialization strategy is as likely to lead to destruction of creative enterprises as it is to profitable creative destruction” (Teece, 2010). The idea alone is not enough to guarantee commercial success.
Emphasizing the importance to exploit better such technologies, may have technical, organizational, or cost advantages. It is surprising that the role of MarTech as a mediator and its disruptive effects on established forms of creative production and consumption have so far been poorly researched. Therefore, the following paragraph will determine the concept of MarTech followed by a theoretical foundation based on the concepts of strategy, business model innovation, and design thinking as a method to identify a novel concept that should support the effective and efficient commercialization of MarTech.
3.2 Theoretical background MarTech
The concept of marketing technology lacks theoretical grounding in economics and business studies. Above all, the mutual effects of creative industries and digital technologies have been poorly researched. This research paper, hence, aims at filling this gap by providing a concept designed for digital marketing agencies to better exploit new technologies from a scientific perspective. In particular, this research project will focus on MarTech. Since digital marketing is always to a certain extent technology- based, one could generally assume that someone who works in digital marketing is dealing with MarTech. Such a definition includes all sorts of digital marketing efforts such as e-mail marketing, social media marketing, online PR, search engine optimization (SEO) and marketing (SEM), and visual identity, e.g. a website (Ryan and Jones, 2012). As part of this research project, however, MarTech is defined particularly as the implementation of technology into a business to achieve marketing and/or commercial objectives (Patrutiu Baltes, 2017) with a particular focus on building a compelling visual identity and marketing campaigns.
MarTech has gained much popularity during the last years, mainly due to the high increase in start-ups operating in that field. According to Brinker (Brinker, 2019), in 2011, 150 companies could be categorized as MarTech companies, rising to 2000 companies in 2015 and finally to a number of 7000 companies in 2019. The young age
and fast development of the industry might be a reason why there is so little academic research available. Once you have built a theory resulting in a convincing story and compelling theoretical explanation for a particular finding/ result, the initial input data might already be outdated. In contrast to the expansion of MarTech in the market, the access to academic literature regarding this industry is minimal, whereas most information can be found via online publishers, private blogs and company websites.
In order to fully understand what MarTech is and how the industry operates, we will first provide a summary of the history of digital marketing, which is considered as the foundation of today's marketing technology. Secondly, the focus of past research efforts will be summarized. Third, an overview of the current MarTech landscape including upcoming trends will be provided, and finally, we formulate a theory that captures the importance of analyzing MarTech in the context of digital agencies.
The term digital marketing was first established in the 1990s during the first stage of world wide web, the so-called Web 1.0. The web was very different back then, as it was characterized by static websites that offer very little to no interaction and real communities were non-existent. However, the first banner advertising started in 1993 (Kingsnorth, 2016) followed by the first web crawler in 1994, called Webcrawler, which is now considered as the foundation of modern search engines. Later, search engines like Google opened up the full bandwidth of the internet by listing all websites and finding them by keywords.
Later, interactivity was the main characteristic when Darcy DiNucci (1999) first defined Web 2.0. In fact, the term Web 2.0 gained popularity in a broader audience and fundamentally changed how websites were designed and created. This new way of creating websites ultimately enabled the web to become a common place for online communities such as Facebook, Twitter, Instagram, Pinterest and YouTube (Kingsnorth, 2016). All that opened up new possibilities of how marketers can advertise their products and services through digital marketing. In recent years, this led to the introduction of a wide range of new technologies and buzzwords, such as big data,
marketing automation and artificial intelligence. Today this can be summarized under the term marketing technology, or short MarTech. But before getting into detail, how MarTech is utilized and implemented at the present time, we will examine what past researchers have already studied and concluded.
Past research has mainly discussed the opportunities and benefits of implementing MarTech to accelerate a clients’ marketing efforts (Kim, Lee and Lee, 2011; Patrutiu Baltes, 2017; Cvitanović, 2018). Other approaches focused on how to successfully implement it. For instance, Brinckerhoff (2010) highlights that MarTech is no substitute for a thoroughly considered market orientation. According to him, the right marketing strategy is equally important to utilize the full potential of MarTech. Beyond that, previous literature shows a particular interest in SMEs analyzing how they enable MarTech within their digital marketing strategy. According to that, Alford and Page (2015) state that the MarTech industry is developing quite rapidly, while especially SMEs are struggling to keep up the pace. It is true that MarTech is a comparatively new discipline, however, given the notably fast-growing range of MarTech solutions and the commonly positive attitude to adopt technology for marketing, the overall understanding and implementation of such are surprisingly weak. Based on a survey of 532 global marketers, a report by Contently (Baker, 2016) states that 99 percent of global marketers say they are using marketing technology, but only 8 percent think their companies implement it thoroughly. In the case of SMEs, the literature states that the first struggles to a successful implementation are two-fold. First, small businesses do often miss the necessary resources in terms of time and money (Wymer and Regan, 2005; Christopher and Ann-Frances, 2007; Barnes et al., 2012), secondly, they are often challenged by the task to integrate familiar, but rather traditional marketing practices with new web-based opportunities (Alford and Page, 2015).
Figure 5 Pie chart portraying the number of marketing technology companies categorized by sectors (2011 and 2019 compared)
Looking at blog posts about current trends and how to succeed in digital marketing, they all come to the same conclusion: The industry is continually changing and flooded with all sorts of services and solutions, which makes it almost impossible to keep up with the latest trends and implementing the perfectly suited tools into a MarTech stack (Accel, 2015; Shah, 2015; Walsh, 2015; Atomic Reach, 2016; Baer, 2016; Mcewen, 2016;
Riley, 2017). As a consequence, nowadays, many companies associate confusion, complexity, and fear with the MarTech-ecosystem. These doubts about the new MarTech wave are intensified by a multitude of categories and subcategories of the respective services within the MarTech landscape. Besides the already mentioned sharp increase in the number of companies operating in this area, the marketing landscape
