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Internet advertising strategy alignment

Internet advertising strategy

Marie-Claude Boudreau and Richard T. Watson Management Information System Department, Terry College of Business, University of Georgia, Athens, Georgia, USA

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Abstract Purpose – Because the web can be an influential medium for attracting and retaining customers, it is critical to examine the connection between web advertising and corporate strategy. This is particularly true for multinational organizations, which face the most complex organizational environment. The purpose of this paper is to propose that multinational organizations should be concerned with alignment of their strategy and web image because of the size and geographic spread of their operations. Design/methodology/approach – This research paper reviews the fundamental global strategies that corporations can pursue (e.g. integration, transnational, national responsiveness) and then empirically examine the relationship between corporate global strategy and web advertising strategy for 20 multinational organizations. Findings – The results show that misalignment between corporate global strategy and web advertising strategy is reasonably common. For two thirds of the companies in our sample, there was imperfect alignment. Originality/value – The paper suggests three reasons why this can be, and offer a tool that enables organizations to recognize how they should handle design and content matters for the combination of corporate and national web sites. Keywords Corporate strategy, Worldwide web, Strategic alignment, Internet, Advertising, Multinational companies Paper type Research paper

Introduction The Internet has had a profound impact on strategic thinking because of its ability to change organizational cost structures and alter communication patterns with customers. While the Internet is not a strategy in itself (Porter, 2001), it has become an important consideration when fashioning strategy. One application of the Internet, the web, has particular implications for the strategies of global businesses because web sites are accessible by anyone who has a web browser, irrespective of location. Thus, global businesses should consider how they align their web site with corporate strategy. Since the web can be an influential medium for attracting and retaining customers (Watson et al., 1998), it is critical to examine the connection between web advertising and global strategy. In this article, we review the fundamental global strategies that corporations can pursue and then empirically examine the relationship between corporate global strategy and web advertising strategy. We conclude by illustrating the relationship between corporate and web management strategies.

Internet Research Vol. 16 No. 1, 2006 pp. 23-37 q Emerald Group Publishing Limited 1066-2243 DOI 10.1108/10662240610642523

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Corporate strategies for multinational organizations Bartlett and Ghoshal (1987) propose a useful typology to analyze worldwide business strategies. They suggest that, depending on the type of criterion an organization wants to emphasize to achieve greater effectiveness, it should choose one of four strategies: (1) Typically, global organizations locate their headquarters in one country while operations are performed in one or more other countries. Under this approach, an organization operates in a centralized manner. Efficiency, obtained through economies of scale, is the key criterion sought by the global company. (2) A multinational strategy indicates that regional operations are relatively autonomous (and thus decentralized) so as to increase sensitivity to differences among countries in which these organizations operate. The key criterion, in this case, is responsiveness to local markets. (3) Under an international strategy, enterprises compete on a worldwide basis against other international companies. An international strategy calls for a more horizontal structure and established strategic linkages between countries in which a firm operates. In this case, learning is the key criterion because effectiveness lies in an enterprise’s ability to transfer knowledge to overseas units. (4) It is difficult for a firm to succeed with a relatively unidimensional strategic capability that emphasizes only efficiency, responsiveness, or learning (Bartlett and Ghoshal, 1987). Rather, a successful strategy must achieve all three goals at simultaneously. The fourth strategy, transnational, pertains to organizations that seek to attain these three goals conjointly. Organizing transnationally necessitates that each organizational activity be performed in the location where it can be best accomplished. Inspired by the work of Bartlett and Ghoshal (1987), Rugman (2001) proposes a two-dimensional matrix to represent the types of strategies embraced by worldwide organizations (see Table I). Whereas the vertical dimension represents the economic benefits of integration, the horizontal dimension represents the benefits of national responsiveness. Although this matrix suggests four potential combinations, Rugman (2001) recognizes three of them. Where the benefits of economic integration are high and the benefits of national responsiveness are low, a pure integration strategy is portrayed (similar to Bartlett and Ghoshal’s global strategy). Where the benefits of economic integration are low and the benefits of national responsiveness are high, a pure national responsiveness strategy is illustrated (similar to Bartlett and Ghoshal’s multinational strategy). The combination of high economic integration with high national responsiveness is referred to as a transnational strategy (similar to Bartlett and Ghoshal’s labeling). The lower left quadrant is said to be an “unsatisfactory set of strategies with few or no benefits”, and is thus disregarded by Rugman.

Low Table I. Potential strategies

Benefits of economic integration

High Low

Benefits of national responsiveness High

Integration

Transnational National responsiveness

Internet advertising strategies for multinational organizations All firms face three strategic challenges: (1) demand risk; (2) innovation risk; and (3) inefficiency risk (Child, 1987). Advertising is one of the main approaches firms employ to manage demand risk by raising awareness of their products. In the mid-1990s, the Internet emerged as a new tool for reaching consumers, and it now provides a variety of technologies (e.g. the web and e-mail) for influencing opinions and wants. Indeed, Internet technologies and marketing objectives can be interlaced to increase the effectiveness of a firm’s consumer directed communications (Watson et al., 2000). Thus, an Internet advertising strategy is concerned with the creation, placement, and distribution of electronic messages that will be read by, and have an effect on, those consumers whom the advertiser most wants to influence. Creation, as well as considering traditional advertising factors (e.g. the message to communicate), must also embrace Internet technologies (e.g. Flash and mp3) that potentially influence consumers. When placing ads, the advertiser must consider which medium to use (e.g. web versus e-mail), and if the web is chosen, where to place the ad on the page for maximum impact (Loiacono et al., 2001). Distribution addresses which web sites and electronic mailing lists will be used. Much of the attention related to Internet advertising has focused on the placement of advertisements on third-party web sites where the market is estimated to be $9.7 billion, about three percent of total advertising (Green and Elgin, 2001). However, this approach ignores a company’s use of its web site to advertise its products. For many firms, the web site has become a major venue for communicating with, and influencing, customers. In many cases, it is the defining image of the firm because it has become a dominant channel of interaction (Watson et al., 1998). Thus, the design and content of the corporate web site are key elements of Internet advertising strategy. Given the increasing importance of the corporate web site as an advertising medium, a key organizational issue is: how does the Internet advertising strategy align with the corporate strategy? The global nature of the Internet is a highly pertinent and unique element of this channel that has a particular influence on advertising strategy. No other advertising medium (e.g. television, radio, newspaper) is unreservedly global. A firm’s web site is automatically visible to all customers with web access no matter where they are located. It can influence consumers everywhere, whether or not the firm so intends. Hence, global firms should explicitly examine the relationship between their corporate and Internet advertising strategies, because most customers would expect a linkage between the two. Imagine the dissonance that could occur in a customer’s mind when the web site and local advertising are at variance. Using the corporate web site as a surrogate for a firm’s Internet advertising strategy, we investigate the degree of alignment between corporate and Internet advertising strategy. Methodology Data were collected in the fall of 2001, using MBA students registered for a class entitled “Globalization and IT”. Students were grouped into teams of two or three

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people, for a total of ten teams. Eight of these teams included at least one international student. Each team assessed six web sites from a pool of 20 multinational enterprises. More particularly, the Internet strategy of each web site was evaluated according to Rugman’s (2001) framework: the web site was reflective of either an integration strategy, a national responsiveness strategy, or a transnational strategy. Criteria examined during this assessment included, but were not limited to, the language capabilities on the web site, the relationship between the corporate and national web sites, and the implementation of customer service. While examining the language capabilities of the web site, students asked: . Is the entire web site translated, or just specific pages? . Is the translation correct and effective? . Can customers be serviced in their own language? . Is the site culturally sensitive? The relationship between the corporate and national web sites was investigated through the following questions: . Are the national web sites accessible directly through their own URL or is there a need to use the corporate URL? . Are national web sites accessible through appropriate search engines and portals? . Is there a similar look and feel across the national web sites? . Are functionalities consistent across national web sites? Finally, questions inquiring about the implementation of customer service included: . Is “buying and delivering” at all possible from the national web sites? . Are payment facilities consistent with local capabilities? . Is a local telephone number available for transaction processing and support? A short write-up about each of the six multinational web sites studied by each team was required, along with an oral presentation on two of the sites. In addition to the assessment conducted by each team, one of the authors evaluated the Internet strategy of all 20 web sites. The multinational enterprises selected for investigation are those used by Rugman (2001) to illustrate his three proposed strategies. Of these 20 enterprises, 11 are in the European Union, three in Asia, and six in North America. As to their corporate strategy, Rugman (2001) classified nine of these as conforming to a strategy of integration, five following a strategy of national responsiveness, and six embracing a transnational strategy[1]. The categorization of these multinational enterprises, based on their home base and corporate strategy, is presented in Table II. Diversity was the main criteria in the assignment of enterprises to teams. Accordingly, each team was assigned companies encompassing multiple countries of origins and multiple strategies. The allocation of companies to teams is indicated in Table III.

Enterprise

Home base

Corporate strategy

Unilever IKEA Benetton Kingfisher Tate & Lyle Rhoˆne-Poulenc Nokia Ericsson Thames Water P&O Philips Honda HSBC Matsushita Procter & Gamble Xerox Hewlett Packard 3M Enron Nortel Networks

European Union European Union European Union European Union European Union European Union European Union European Union European Union European Union European Union Asia Asia Asia North America North America North America North America North America North America

National responsiveness Integration Transnational National responsiveness Transnational National responsiveness Integration Integration Integration National responsiveness National responsiveness Integration Integration Integration Transnational Integration Transnational Transnational Integration Transnational

Results The study was designed so that three teams evaluated each enterprise web site. In addition, a separate independent assessment, without knowledge of the other evaluations, was conducted by one of the authors. Thus, a total of four judges evaluated each one of the aforementioned web sites. As indicated in Table IV, in three cases the four judges were in complete agreement about an enterprise’s Internet strategy. In 12 cases, three of the judges agreed. Finally, in five cases, the judges were divided between different strategies. There is a need to assess the reliability of these results before further discussion. Assuming that the assessment of a firm’s Internet strategy is random, we can compute the probability of the various levels of agreement by chance. Using combinatorial mathematics, we computed the number of agreements for all the possible permutations of the three possible strategies (see the Appendix). The resulting probabilities are shown in Table V. These probabilities can then be used to test the overall distribution of agreement across the 20 sites using a x 2 test to compare observed and expected frequencies. The resulting test, x 2 (18.33, 2, p ¼ 0:0001) suggests that we can rule out agreement by chance. In other words, the level of observed agreement warrants further analysis. It appears that the judges, in most cases, could clearly identify a distinctive strategy. If we remove the five cases for which the judges did not agree on the Internet advertising strategy, we are left with 15 cases where at least three of the four judges are in agreement. Each of the 15 organizations, along with their Internet strategy, corporate strategy, and extent of alignment between the two, are presented in Table VI. For these organizations, we can then compare each corporate strategy (as supported by Rugman, 2001) with its Internet advertising strategy (as supported by our data). The data show that there are only five matches (33.3 percent), or alignments, between corporate and the

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Table II. Enterprises investigated

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Team

Companies

Representation

Team 1

Unilever Philips Ericsson Benetton Matsushita Hewlett Packard

European Union: 4 Asia: 1 North America: 1 Responsiveness: 2 Integration: 2 Transnational: 2

Team 2

Kingfisher IKEA Thames Water Honda Procter & Gamble Nortel Networks

European Union: 3 Asia: 1 North America: 2 Responsiveness: 1 Integration: 3 Transnational: 2

Team 3

Rhoˆne-Poulenc Nokia Xerox Benetton HSBC 3M P&O IKEA Xerox Tate & Lyle Matsushita 3M Rhoˆne-Poulenc P&O Ericsson Honda Procter & Gamble Enron Unilever Nokia Thames Water HSBC Hewlett Packard Nortel Networks Kingfisher Philips Ericsson Tate & Lyle Hewlett Packard Enron Rhoˆne-Poulenc Philips Thames Water Benetton Matsushita 3M

European Union: 3 Asia: 1 North America: 2 Responsiveness: 1 Integration: 3 Transnational: 2 European Union: 3 Asia: 1 North America: 2 Responsiveness: 1 Integration: 3 Transnational: 2 European Union: 3 Asia: 1 North America: 2 Responsiveness: 2 Integration: 3 Transnational: 1 European Union: 3 Asia: 1 North America: 2 Responsiveness: 1 Integration: 3 Transnational: 2 European Union: 4 Asia: 0 North America: 2 Responsiveness: 2 Integration: 2 Transnational: 2 European Union: 4 Asia: 1 North America: 1 Responsiveness: 2 Integration: 2 Transnational: 2 (continued)

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Team 4

Team 5

Team 6

Team 7

Team 8

Table III. Team assignments

Team

Companies

Representation

Team 9

Kingfisher P&O Nokia Honda Procter & Gamble Enron

European Union: 3 Asia: 1 North America: 2 Responsiveness: 2 Integration: 3 Transnational: 1

Unilever IKEA Xerox Tate & Lyle HSBC Nortel Networks

European Union: 3 Asia: 1 North America: 2 Responsiveness: 1 Integration: 3 Transnational: 2

Team 10

Company

Judge 1

3M Benetton Enron Ericsson Honda HP HSBC Ikea Kingfisher Matsushita Nokia Nortel P&G P&O Philips Rhoˆne-Poulenc Tate & Lyle Thames Water Unilever Xerox

TR IN IN RE RE IN TR TR RE RE RE TR IN TR TR RE RE IN RE RE

Internet advertising strategy Judge 2 Judge 3 TR IN RE TR IN RE RE IN IN IN TR IN IN IN RE TR IN TR RE RE

Judge 4

RE IN IN TR RE TR RE IN RE RE RE IN IN TR TR TR IN RE IN RE

TR IN IN TR RE TR RE IN RE RE TR IN IN IN TR RE IN RE RE RE

2 3 4

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Table III.

Agreement 3 4 3 3 3 2 3 3 3 3 2 3 4 2 3 2 3 2 3 4

Note: RE, Responsiveness; IN, integration; TR, transnational

Number of agreements

Internet advertising strategy

Probability

Expected

Observed

0.6667 0.2963 0.0370

13.33 5.93 0.74

5 12 3

Table IV. Assessment of Internet strategy

Table V. Probabilities of agreement

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Table VI. Alignment of strategies

Company 3M Benetton Enron Ericsson Honda HSBC Ikea Kingfisher Matsushita Nortel P&G Philips Tate & Lyle Unilever Xerox

Internet advertising strategy Corporate strategy (according to the judges) (according to Rugman, 2001) Alignment of strategies TR IN IN TR RE RE IN RE RE IN IN TR IN RE RE

TR TR IN IN IN IN IN RE IN TR TR RE TR RE IN

Yes No Yes No No No Yes Yes No No No No No Yes No

Note: RE, Responsiveness; IN, integration; TR, transnational

Internet strategies: 3M, Enron, Ikea, Kingfisher, and Unilever. In four cases (26.6 percent), the corporate and Internet strategies appear to be at complete odds, with one being integration while the other being responsiveness, which are Honda, HSBC, Matsushita, and Xerox. Finally, in the remaining six cases (40 percent), the corporate and Internet strategies are not aligned, but this misalignment is less extreme as one strategy is either integration or responsiveness, whereas the other is transnational. Since a transnational strategy subsumes both the criteria of integration and responsiveness, it has some overlap with both of these strategies. Cases falling into this moderate misalignment include Benetton, Ericsson, Nortel, P&G, Philips, and Tate & Lyle. We will now discuss three organizations that illustrate these different types of alignment. One case portrays an organization that has complete alignment between its corporate strategy and Internet advertising strategy (i.e. 3M), another case portrays an organization that has complete misalignment between both strategies (i.e. HSBC), and yet a third case demonstrates a moderate misalignment between corporate and Internet strategies (i.e. Benetton). 3M Minnesota Mining & Manufacturing (3M) is a technology company that manufactures a wide variety of products as diversified as office supplies, construction, building maintenance, telecommunications, and chemicals. For many of its products, culture and local usage are not important considerations. Home videocassettes, for instance, are standardized and are sold on the basis of price and quality. Other 3M products, however, are greatly influenced by local preferences or regulations. Products related to telecommunications, for example, have their own modifications for local applications. Considering its success in combining integration and responsiveness, Rugman (2001) classifies 3M as a company adopting a transnational corporate strategy. Likewise, the judges considered 3M’s Internet advertising strategy as transnational, because it accentuates both high responsiveness and high integration. On the one hand,

high responsiveness is demonstrated as a visitor navigating the corporate web site (www.3m.com) can easily specify which of 3M’s regions is of interest. Each country-specific web site is, as well as we can tell, well translated into the region’s most used language. A Chinese judge commenting on the Chinese 3M web site emphasized: “There is no literal translation”. The brand names are all translated by using local words that reflect the meaning and are also easier to remember: bao shi tie for Post-it, shi jue li for Scotchlite, xing xue li for Thinsulate, etc. The content is very well edited to reflect the current and idiomatic usage of language. There are some changes in the way the sentences are worded. The mission statement, for example, is not translated word by word into Chinese. The linguistic changes better reflect the cultural and social customs of the nation. There are also some proverbs and fashionable words being used in the web site. Clearly, this country-specific web site is culturally sensitive. Responsiveness is also expressed, as each country-specific web site has a content that is specifically targeted to local customers. It also appears that customers can be serviced in their own language, as local contact information (phone number, mailing address, phone, and fax) is made available. On the other hand, high integration is also apparent. For the most part, each local web site has a 3M “look and feel”, embracing a common logo, colors, and functionality. Most local web sites need to be accessed from the main corporate web site. In other words, there is a need to go through the corporate web site prior to accessing a local web site, as www.3m.de, for an example, is not valid. Moreover, some local 3M web sites are not accessible through popular search engines; an advanced search on AltaVista for “3M and France” does not lead one towards 3M’s French web site. Finally, although each country-specific web site is translated, some functionality, such as the search function, is solely in English. This also hints at 3M’s desire to maintain some integration in its Internet strategy. Overall, 3M’s Internet strategy does strike a balance between integration and responsiveness, and is thus classified similarly as its corporate strategy, that is, as being transnational. HSBC The Hong Kong and Shanghai Banking Corporation (HSBC) is one of the first truly global banks, offering a full range of financial services from retail to corporate banking to insurance and financial management. The bank owns Hong Kong Bank and most of Hang Seng Bank, both in Hong Kong. It also has a large presence in Britain, owning what was previously known as the Midland Bank chain. Moreover, HSBC owns the Marine Midland banks in the USA, the Hong Kong Bank of Canada, and has acquired many large banks in Latin America. In all these cases, HSBC greatly improved the efficiency of the under-performing local banks through better systems and processes, which is why Rugman (2001) classifies HSBC’s corporate strategy as one of integration. As he acknowledges, given the constant pressure in banking to reduce costs through greater economies of scale and improved information technology, HSBC is well positioned to continue as an industry leader because of its successful globalization strategy. In this case, the judges considered the Internet advertising strategy of HSBC as very different from its corporate strategy. They assess that HSBC’s web site emphasizes responsiveness much more than integration. According to the judges, the main corporate web site (www.hsbc.com/) is not very attractive and serves mainly as a

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router to other HSBC web sites targeted by country, group member, or type of financial service. Most of the country-specific web sites offer content both in the local language and English. Many country-specific web sites have their own intuitive URLs, which are inconsistent (for example, India’s HSBC site is accessible with the URL www.in.hsbc. com; Greece’s HSBC site is accessible through www.hsbc.gr; and Argentina’s HSBC URL is www.hsbc.com.ar – all slightly different naming conventions). Also, the country-specific web sites in which HSBC has a major presence have very highly customized information. Whereas the look may be quite consistent in terms of logo, coloring, and general layout, the content is customized to local requirements. The services available, therefore, are different from web site to web site. The American HSBC site, for example, offers a below-prime loan to small businesses affected physically or economically by the events of September 11. On the Indian HSBC site, as a second example, one finds services targeted to non-resident Indians. In addition, it is often possible for customers to carry out transactions according to the regional practices and technology (online banking, telephone banking, ATM, etc.) in the local currency. Each country-specific HSBC web site also demonstrates a cultural sensitivity, as many contain promotional content catering to local festivals and culture. For example, the Indian HSBC web site refers to Dassera (an important festival occurring when the web site was analyzed), for which special discounts are offered to HSBC cardholders. Furthermore, each HSBC’s country-specific web site provides local contact information, as well as access to a local helpdesk. Most of these country-specific web sites have been registered with major search engines. The HSBC Argentina and HSBC Korea web sites were promptly found through Yahoo! by typing the keywords “HSBC þ Argentina” and “HSBC þ Korea”, respectively. Similarly, local search engines bring up the links to the country-specific web site, not the corporate one. For example, when one searches for HSBC via www. khoj.com (a leading Indian search engine), it brings up the link to the Indian HSBC web site. In summary, considerable autonomy has been given to local divisions to cater to local needs and preferences. Corporate is not trying to influence local decisions in terms of Internet strategy, which appears to be totally decentralized. Benetton Benetton, the Italian clothing designer and manufacturer, has been successful partly because its production and design concepts are built on a strong home base. It expanded the marketing end of its business through closely monitored (but not owned) independent stores, which were able to use the Benetton brand name and distinctive colors and were supported by clever international advertising. For these reasons, Rugman (2001) considers Benetton as a company embracing a transnational corporate strategy. All four judges consider Benetton’s Internet advertising strategy as integration, where the benefits of economic integration are high while the benefits of national responsiveness are low. Four main characteristics from Benetton’s web site support this classification. First, one should notice the exclusive existence of Benetton’s corporate web site, without any link to other Benetton national sites. In fact, the URL www.benetton.fr or www.benetton.de all lead to the same corporate web site: www. benetton.com. The only potential link to other countries is for purchasing, which is

possible for German, Italian, and British customers only. Nevertheless, purchasing capabilities in these countries are only possible if one goes through the corporate web site first. Second, the site only uses the English language with no possibility for translation. In fact, even German and Italian customers interested in purchasing products will have to do so in English. Third, Benetton’s corporate web site has several sections that are not very culturally sensitive. Of course, Benetton is known for its advertising campaigns that promote the appreciation of many cultures. However, many of the pictures and messages that are housed on Benetton’s web site may be quite offensive to some. For example, there are several very racy images, such as the world cup soccer balls shown inside a condom and a black horse mating with a white one. Whereas some people may find this advertising audacious and clever, others are likely to find these images somewhat risque´ and distasteful. Through its web site, Benetton propagates the same bold image to all customers around the world, irrespective of local cultural norms. Finally, although the organization does business internationally, it appears that Benetton operates in a centralized manner where the headquarters location is responsible for all advertising and marketing campaigns, clothing designs, production, etc. There is very little customization of products, marketing, etc. at a local level. The purchasing capabilities offered to German, Italian, and British customers, for example, are all similar both in term of functionality and appearance. One gets the impression that the parent company’s strategies are implemented within all of the various retail locations throughout the world, allowing Benetton to achieve economies of scale and efficiency. Discussion The goal of advertising is to deliver messages that positively influence current or prospective customers. Given that advertising has such an influence on customers, corporations spend considerable time and funds creating and placing advertisements. As such, US advertising expenditure is around $320 billion (Green and Elgin, 2001). Large corporations, in particular, take care to build brands that are recognizable throughout the world. However, it would appear that many firms have not fully realized the potential of the corporate web site as an advertising medium. For two thirds of the companies in our sample, there is no perfect alignment between corporate and Internet advertising strategy. There are several possible reasons for this lack of connection. First, it could be that the corporate web site is not seen as part of a corporation’s overall advertising strategy. It may not be perceived of as a key channel for reaching customers, because internal advertising executives are still fixated on traditional channels and advertising logic. Thus, these executives might think of Internet advertising as placing banner ads on high-traffic web portals (e.g. Yahoo!) and do not think of advertising on their corporate web site. Given that many customers are now conditioned to go to corporate web sites to learn about products and service, this would be a serious oversight. Second, corporations might not have had the time or resources to align their corporate and Internet advertising strategies. The introduction of Internet technology into most corporations has required a tremendous reallocation of resources to create an

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Internet presence, firm intranet, and partnership extranets. The scarcity of Internet skills, particularly before the dot.com flameout, meant that many initiatives had to be delayed and web sites are incomplete[2]. So, for example, Benetton might have decided that, given its many relationships with clothing manufacturers in Northern Italy, building an extranet to support data exchange and production integration might have a higher return on investment than investing in a corporate web site. Third, some firms might have decided that the corporate web site does not have enough impact on its customer base to justify an integrated Internet advertising strategy. HSBC, for example, possibly recognizes that corporate customers are not greatly influenced by either its global or relevant local web site. Banking, especially at the corporate level, has a strong personal relationship element and a web site has little persuasive impact. Thus, while we can make a sound case for alignment of corporate and Internet advertising strategy, we can also suggest potential reasons explaining why such an alignment might not have yet taken place and why misalignment is relatively common. Nevertheless, the compelling rationale for alignment of functional strategies with corporate strategy suggests a long-term convergence of Internet advertising and corporate strategy. Thus, what are needed are some tools for organizations to decide how to achieve this alignment. The quality of a web site is determined by four key factors: (1) ease of use; (2) usefulness; (3) entertainment; and (4) complementarity (Loiacono, 2000). It must be easy to navigate and readable, have the information visitors require, be aesthetically appealing, have a positive emotional impact, and allow the visitor to perform most, if not all, transactions with the firm. For the purposes of simplifying the analysis, we further reduce web site issues to those of design (ease of use, entertainment, and functionality) and content (usefulness of information). Design and content can either be handled locally (i.e. headquarters for a country) or globally (global headquarters for the firm). As such, the elements of design, such as the overall look and feel of the web site (e.g. navigation icons, placement of the corporate logo), and general functionality (e.g. support for online ordering or parcel tracking) can be decided by corporate or each nation. Similarly, the content can be created by corporate headquarters, with appropriate translation, or created locally. This combination of choices results in four web site strategies for multinationals (see Table VII). Local design/global content does not make sense. If content were created at the corporate level, it would be inefficient to then let each national office design a local web site. The only circumstances under which this might make sense is if particular colors

Table VII. Web site strategies for multinationals with corresponding multinational strategy in parentheses

Content

Design

Global Local

Global

Local

Centralization (integration)

Coordination (transnational) Decentralization (national responsiveness)

or words were inappropriate for the local culture. Global design/global content implies centralized corporate development with one group developing a single web site for all countries. This corresponds to an integration strategy where the benefits of economic integration far outweigh national responsiveness. A global design/local content approach requires a central group that sets design standards, so there is a global look and feel, but leaves the control and creation of content to national web masters. This parallels the transnational corporate strategy and requires coordination between the corporate design team and local content builders. A completely decentralized strategy of local design/local content under the control of national webmasters mirrors a national responsiveness strategy. Conclusion When firms realize that their web site can be a significant medium for interacting with present and prospective customers, they should also recognize that Internet advertising is an integral element of corporate advertising strategy. A direct consequence of this acknowledgment should be the realization that a firm’s collection of web sites must reflect corporate goals. The need for functional areas to align with corporate goals is well established. In particular, multinationals, which arguably face the most complex organizational environment, need to be especially concerned with alignment because of the size and geographic spread of their operations. This research indicates that for multinationals, a misalignment between corporate strategy and Internet advertising strategy was reasonably common. The newness of the web, at the time data were collected, may not have given corporations sufficient time to both recognize the role of the web in advertising and implement Internet advertising strategies that are aligned with corporate goals. It is likely that, since our research was conducted, corporations now take greater advantage of Internet advertising. It remains to be seen, however, whether they do a better job of aligning their Internet advertising strategy with their corporate strategy. For those organizations seeking alignment, we offer a tool (see Table VII) that enables them to recognize how they should handle design and content matters for the combination of corporate and national web sites. Our research has certain limitations. First, the subjective process that we relied on to assess each web site’s strategy forced us to disregard 25 percent of the cases in our initial sample. This percentage is relatively high, and more precise guidelines on classifying a strategy might have increased the level of agreement. Of course, it might also be the case that a hybrid strategy led to a lack of agreement among the judges. Also, it is possible that an organization’s country of origin might have influenced its web site design. Similarly, an organization’s product line (or type of service offered) may have an impact on the design of its web site. Both of these factors (cultural origin and type of product/service) have been acknowledged as important in prior literature (e.g. Simeon, 1999; Okazaki and Rivas, 2002), and should thus be considered in future research, which would also require larger samples in order to control for these factors. The larger issue, which we may well address in future work, is whether alignment of corporate and Internet advertising strategies leads to superior performance. This is the overarching question that research on the alignment of these two strategies should ultimately address. We believe that our initial work lays a foundation for addressing this fundamental question.

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Notes 1. We replaced one organization from Rugman’s (2001) original list – Fuji Xerox – with another, i.e. Honda. Boudreau et al. (1998) consider Honda to espouse a corporate strategy of integration. 2. The judges found many non-working links, which is evidence of incompleteness. 3. The number of permutations of n objects, n1 of which are of one kind, n2 of another kind, . . . , nk of the k kind, i.e. n1 þ n2 þ . . . þ nk ¼ n, is n!=ðn1 ! n2 ! . . . nk !Þ.

References Bartlett, C.A. and Ghoshal, S. (1987), “Managing across borders: new strategic requirements”, Sloan Management Review, Vol. 29 No. 1, pp. 43-53. Boudreau, M.-C., Loch, K.D., Robey, D. and Straub, D. (1998), “Going global: using information technology to advance the competitiveness of the virtual transnational organization”, The Academy of Management Executive, Vol. 12 No. 4, pp. 120-8. Child, J. (1987), “Information technology, organizations, and the response to strategic challenges”, California Management Review, Vol. 30 No. 1, pp. 33-50. Green, H. and Elgin, B. (2001), “Do e-ads have a future?”, Business Week. Loiacono, E. (2000), “WebQuale: a web site quality instrument”, doctoral dissertation, Department of Management Information Syeytems, University of Georgia, Athens, GA. Loiacono, E., Taylor, N. and Watson, R.T. (2001), “Effective web advertising: foreground, background, or sideground?”, Journal of Interactive Marketing, under review. Okazaki, S. and Rivas, J.A. (2002), “A content analysis of multinational’s web communications strategies: cross-cultural research framework and pre-testing”, Internet Research, Vol. 12 No. 5, pp. 380-90. Porter, M. (2001), “Strategy and the Internet”, Harvard Business Review, Vol. 79 No. 3, pp. 62-78. Rugman, A.M. (2001), The End of Globalization: Why Global Strategy is a Myth & How to Profit from the Realities of Regional Markets, AMACOM, New York, NY. Simeon, R. (1999), “Evaluating domestic and international web-site strategies”, Internet Research, Vol. 9 No. 4, pp. 297-308. Watson, R.T., Akselsen, S. and Pitt, L.F. (1998), “Attractors: building mountains in the flat landscape of the world wide web”, California Management Review, Vol. 40 No. 2, pp. 36-56. Watson, R.T., Zinkhan, G.M. and Pitt, L.F. (2000), “Integrated Internet marketing”, Communications of the ACM, Vol. 43 No. 6, pp. 97-102.

Appendix. Computing probabilities of agreement by chance The four judges each have three choices for classifying the strategy of any firm. Thus, there are 34 ¼ 81 possible choices. These possible choices can be broken down into three categories: (1) four judges agree; (2) three judges agree; and (3) two judges agree. Since there are only three choices for the four judges, at least two judges must agree. The computations for each category are given below.

Four judges agree If the four judges agree, there are three choices for the first judge and only one choice (i.e. the same choice) for subsequent judges. Thus the number of possibilities where all judges agree is 3*1*1*1 ¼ 3. Three judges agree If three judges agree, then one judge has three choices, two judges have one choice (the same as the judge with whom they agree), and the remaining judge has two choices (one of the two not selected by the other judges). Thus the number of combinations under this condition is 3*1*1*2 ¼ 6. However, there are four choices of the one judge who disagrees, so the total number of possibilities is 6*4 ¼ 24.

Internet advertising strategy 37

Two judges agree In the case when two judges agree, there are two conditions: (1) Two judges agree, and the other two judges disagree with these judges and each other. This can be treated as a permutation of three different items[3], and the appropriate calculation is 4!=ð2! 1! 1!Þ ¼ 12. Since we have three ways of selecting the two judges that agree, the total number of possibilities is 36. (2) Two sets each of two judges agree within their set, but not between sets. This is a permutation of two different items, and the appropriate calculation is 4!=ð2! 2!Þ ¼ 6. Since there are three (3C2) ways of selecting the set of judges that agree, the total number of possibilities is 18. In total, there are 54 different possibilities of two judges agreeing. Summary The results of these calculations are summarized in Table AI. Number of judges agreeing

Number of possibilities

Probability of occurring by chance

2 3 4

3 24 54 81

0.0370 0.2963 0.6667 1.0000

Corresponding author Marie-Claude Boudreau can be contacted at: [email protected]

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Table AI. Probabilities of agreement by chance