ABSTRACT The advertising industry is currently undergoing a profound restructuring process, where traditional media like TV and print are being complemented and replaced by new forms of online and interactive advertising. The versatile and
interactive nature of the Internet medium represents new opportunities and challenges for the advertising agencies that transcend their traditional role as developers of creative contents and campaigns. The paper discusses how this transformation process affects services in the new online
market communication regime. Based on a case study on how the Internet affects the advertising industry and its related actors the paper argues that the introduction and growth of Internet‐based market communication leads to a convergence of creative, strategic and technical services.
It is suggested that this represents a new production and market communication space in which the end consumer often plays a more pro‐active and participatory role. The paper argues that the convergence of skills and services across advertising and information and communications technology
can be viewed as a Jacobian cluster mutation across related and co‐evolving industrial agglomerations. The empirical findings are interpreted and conceptualised as a cyclical relationship between knowledge externalities associated with specialisation and differentiation.