Many companies are waking up to the potential of the interactive consumer market. Not only are the numbers of users of on-line and Internet services soaring, but the majority of people who are subscribing to these services tend to be young, well-educated, and richer than average. In short, they make particularly good marketing targets.

Interactive media is likely to revolutionize marketing for many consumer companies because it allows marketers to deliver real-time, personalized services and content, one consumer at a time. It is what we call digital marketing. Digital marketing leverages the unique and powerful characteristics of interactive media: it is addressable, meaning that each user can be identified and targeted separately; it allows for two-way interaction; services can be tailored for each individual customer; and purchases can be made and influenced on line. However, to capture the benefits of digital marketing, companies must integrate interactive media into their existing businesses and marketing programs. And that is difficult to achieve.

Most consumer companies are struggling to know what to do and how. The old models of marketing simply do not work in this new world, and as a result most of today’s digital marketing applications are uninspiring (as anybody...