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This blog post comes live from the Forrester Marketing Forum 2010, where the theme is adaptive marketing.  During a break-out session, Forrester Vice President/Principal Analyst Shar VanBoskirk discusses organizing your interactive marketing team to embrace change successfully.

First, she issues a caveat and overriding theme: the wrong priority is to pursue the right organizational structure.  In fact, there is no singularly successful approach.

To set the context, Shar asks, How is interactive changing the way marketing actually functions inside the organization?  She asserts that:

1. Budgets are continuing to shift from traditional to online media. For the first time, growth in online is actually cannibalizing offline as opposed to resulting from organic growth.   Why?  One big reason is that marketers love the accountability of interactive tools.  The recession has moved marketing spend downstream from branding to point-of-sale, performance-based activities — which contributes to the growth of interactive.  In fact, by 2014, more than 20 percent of all advertising will go digital. We’re also seeing a decline in advertising overall.  Dollars are going into more efficient interactive channels and marketing investments like innovation, research, customer service, and marketing-specific technology.

2. Social media is transforming customer relationships.  This change, well documented elsewhere, affects your organization. Consumers expect to have interactive relationships with their favorite brands via many, many social channels like blogs and online discussion forums — and consumers want the brand to talk back.  Insights from social channels can inform PR, customer service, interactive marketing, and customer intelligence.  And interactive can play a much bigger role harnessing the power of social.

3. Bid-based audience targeting is redefining media buying.  We’re seeing a greater proliferation of media impressions. You can buy advertising on someone’s flickr page.  And quality of data is improving.  There is also increasing competition for search-based ads.  The result is the advent of the demand-side platform — a buy-side tool that helps media buyers aggregate, bid on, and optimize display inventory across exchanges, yield management networks, and ad networks.

4. We’re seeing the emergence of the Splinternet, a new era of the Internet in which devices proliferate and social online experiences live behind a user log-in. Devices control the interactive environment, forcing marketers to figure out how to distribute content more effectively across devices.

But along with digital catalysts are some challenges.  For instance, marketers are operating with leaner staff.  Interactive teams are too often being pushed into tactical mode.  Teams are not comprehensive. Interactive teams are not necessarily equipped with skills to manage interactive marketing.  And tensions abound between interactive marketing and other departments like information technology.

Shar believes no organizational model addresses the challenges facing interactive marketing teams.  She believes the real challenge is preparing your team for “interactive maturity.”  Interactive teams need to support existing business functions.  They need to spread their interactive DNA to other groups.  They need to define interactive job descriptions and career paths.  Interactive teams must mature by establishing interactive program standards. And interactive teams should use their insights to inform offline marketing.

She believes interactive organizations should mature along a spectrum. Less-mature organizations use a “scattered” model whereby teams lack a champion and clear role.  More mature organizations use a centralized interactive team that supports brand groups, product groups, or business units — akin to a service bureau.  (Another related model is the eCommerce alignment model, in which the interactive team’s primary focus is driving online sales.)

Shar believes organizations need to mature to a distributed model — meaning that you distribute your digital marketingresources into the different business functions you support.  This is not an ad-hoc scattered model but rather a more thoughtful way to support different parts of the organization.  The distributed model is a way for marketers to share their DNA throughout the organization.  The model aligns the business, customer, and channel more effectively.

An example: Newell Rubbermaid.  Prior to 2007, Newell Rubbermaid had different interactive strategies and sites for its 30 different brands.  Newell Rubbermaid moved to a centralized model to create an enterprisewide strategy, common Web platform, and standard channel processes.  The company hired an executive to focus on e-business and interactive marketing, reporting to the CIO with a dotted line relationship to the VP of marketing.

Newell Rubbermaid also elected to use interactive marketing to support branding and commerce goals.  Moreover, the interactive marketing team shares costs and accountability with the brands.  The team also trains others across the company on interactive marketing.  Newell Rubbermaid has also standardized interactive team roles.

Another example: Meijer wanted to reposition its stores and brand against increased competition in core markets and declining consumer spend due to the recession.  The solution: Meijer moved interactive marketing from e-commerce into a cross-channel media team that supports loyalty, brand engagement, community, and online/offline sales.

Meijer also uses interactive to support multiple goals and organizes to support functions, not channels.  Meijer also uses digital insights to inform offline media strategies.

For more insight, contact Shar at svanboskirk@forrester.com