Cross channel effects of search engine advertising on brick & mortar retail sales: Meta analysis of large scale field experiments on Google.com

We investigate the cross channel effects of search engine advertising on Google.com on sales in brick and mortar retail stores. Obtaining causal and actionable estimates in this context is challenging: Brick and mortar store sales vary widely on a weekly basis; offline media dominate the marketing budget; search advertising and demand are contemporaneously correlated; and estimates have to be credible to overcome agency issues between the online and offline marketing groups. We report on a meta-analysis of a population of 15 independent field experiments, in which 13 well-known U.S. multi-channel retailers spent over $4 Million in incremental search advertising. In test markets category keywords were maintained in positions 1-3 for 76 product categories with no search advertising on these keywords in the control markets. Outcomes measured include sales in the advertised categories, total store sales and Return on Ad Spending. We estimate the average effect of each outcome for this population of experiments using a Hierarchical Bayesian (HB) model. The estimates from the HB model provide causal evidence that increasing search engine advertising on broad keywords on Google.com had a positive effect on sales in brick and mortar stores for the advertised categories for this population of retailers. There also was a positive effect on total store sales. Hence the increase in sales in the advertised categories was incremental to the retailer net of any sales borrowed from non-advertised categories. The total store sales increase was a meaningful improvement compared to the baseline sales growth rates. The average Return on Ad Spend (ROAS) is positive, but does not breakeven on average although several retailers achieved or exceeded break-even based only on brick and mortar sales. We examine the robustness of our findings to alternative assumptions about the data specific to this set of experiments. Our estimates suggest online and offline are linked markets, that media planners should account for the offline effects in the planning and execution of search advertising campaigns, and that these effects should be adjusted by category and retailer. Extensive replication and a unique research protocol ensure that our results are general and credible.     

The Effect on Sales of Color in Newspaper Advertisements

Little empirical research is available on the effects on retail sales of the use of color in newspaper advertising. This study analyzes the results of two experiments conducted by the Long Beach Independent Press-Telegram, and concludes that median sales volume gains of approximately 41% may be realized by using one-color, single-exposure newspaper ads, instead of otherwise identical black-and-white ads, for price-reduced items. This conclusion is supported by statistical analysis of empirical data on actual sales.     

Going for gold: Investigating the (non)sense of increased advertising around major sports events

Major sports events draw unsurpassed media attention. Companies are motivated to increase their advertising investments around these events to reach large audiences in a short period. Is such an advertising surge actually beneficial though, or should companies avoid advertising in these periods because of negative effects of competitive interference? This study investigates when consumer packaged goods companies should invest in advertising to increase sales: before, during, or after the event or outside these event periods. The author estimates short- and long-term own- and cross-advertising elasticities for 206 brands using four years of weekly data. Although considerable heterogeneity exists across brands, own-advertising effectiveness diminishes especially before and during major sports events, in both the short and the long run. In addition, brands benefit less from category-demand effects through competitors' advertising. Conversely, greater increases in advertising spending resulting in significant growth in share of voice around focused, single-sport events are a successful strategy to overcome this overall general negative trend.     

Advertising/Sales Ratios in the UK, 1969–1980

For more than 30 years The Advertising Association has produced statistics of advertising expenditure in the United Kingdom. The figures are produced by means of an annual survey in which data are collected from the media, advertising agencies and advertisers. The advertising/sales ratios shown below are the last section of the figures to be released each year, since it is necessary to wait for the CSO compiled ‘sales’ data before the calculations can be made.     

Advertising in China and Hong Kong

A study of a selection of major US corporations was undertaken to determine how advertising budgets are appropriated. The relationship between profit and sales and the size of the advertising budget was examined to see if advertising allocations are being increasingly arrived at using ‘modern’ techniques such as mathematical decision rules or whether simple rules of thumb are still predominant in practice. Budget allocations for 80 companies to six media and their relations to sales and profit were also evaluated. Advertising budgets were examined in three matched categories: for brand advertising, for corporate advertising and for mixed advertising.     

Political Advertising and the Broadcast Media

Politicians, broadcasters and advertising practitioners have shown concern over problems associated with political advertising. These problems include allocated time to political advertising in the broadcast media, content of political advertising and cost of political advertising through the broadcast media. Previous discussion of these problems has focused on one or two problem areas with limited discussion of proposed solutions. This article integrates positions on these problem areas and provides an overivew of proposed solutions.     

Information Content of Advertising in the United States,Japan, South Korea,and the People's Republic of China

The results of this four country-four media study indicate that different countries/cultures have varying degrees of information cues in their advertising. Broadcast media (television and radio) have lower information content than do print media (magazine and newspaper) in all countries. Overall, the average number of cues per advertisement for all four countries was: 3.10 for magazine, 2.91 for newspaper, 2.14 for television, and 2.05 for radio. The study found that the information content (number of cues) and the type of cues varied by media within each country. This implies that international advertisers need to consider their strategies in developing advertising themes for various target audiences in different countries.     

Synergistic,Antagonistic, and Asymmetric Media Interactions

Despite the highly touted potential for synergies in cross-media advertising, much has yet to be discovered about how the effects of multiple media combine to shape sales response. Two challenges related to the investigation of media interaction effects are their complex nature and their specification in a sales response model. The authors adopt a flexible modeling approach, multivariate adaptive regression splines (MARS), which captures parsimoniously complex interaction effects and facilitates their measurement and interpretation. Analysis of multiple data sets on brand sales and media spending points to the following typology of media interaction effects: (1) synergistic (positive interactions), (2) antagonistic (negative interactions), and (3) asymmetric, where each medium does not contribute equally to the interaction. The findings show that 44% of media spend produces synergistic effects, whereas 21% produces antagonistic effects. Hence synergy is not the de facto outcome of cross-media advertising. Interestingly, low-budget media play a key role in producing interaction effects.     

Advertising budgets in competitive environments

Firms can approach advertising competition either by setting advertising budgets (as in the percentage of sales method) or target sales levels (as in the objective and task approach). We study firms’ incentives to adopt one or the other posture using a two-stage model of duopolistic competition. In the first stage, each firm chooses to commit either to an advertising budget, letting its sales follow from the market response function, or to a desired sales level, promising to adjust its advertising spending accordingly. In the second stage, firms choose the actual levels of their advertising budget or sales target. When prices are exogenous, we show that, due to strategic effects, if a firm benefits from its rival’s advertising (as when advertising increases awareness of the product category) then setting an advertising budget dominates setting a sales target. On the other hand, if a firm is harmed by its rival’s advertising (as when advertising increases the firm’s share of a fixed market), then committing to a sales level dominates. We extend these results in several directions and show that when firms engage in price competition as well as advertising the nature of advertising and product-market competition interact to determine whether setting an advertising budget or sales target dominates.

The 99 price ending as a signal of a low-price appeal

There is evidence that the rightmost digits, or endings, of retail prices can communicate meanings to consumers. To better understand how such meanings are formed, this paper addresses the question of how the 99 price ending can have a low-price meaning even though 99-ending prices tend to be higher rather than lower competitive prices. Analysis of two large samples of newspaper price advertising indicates that there is a strong and robust correlation between the use of the 99 price ending and the presence of a low-price appeal such as a claimed discount. It is suggested that the salience of price advertising leads it to dominate other sources of information in the consumer's learning of price-ending meanings.     

Decomposing the effect of advertising: What happens in the retail channel?

The diverging interests of manufacturers and retailers famously give rise to the double marginalization problem but have consequences far beyond pricing. Advertising is another marketing instrument that is under the control of the manufacturer but its ultimate effect on consumer demand also depends on retailers’ pricing decisions. We decompose the effect of advertising in the channel and highlight an additional route through which advertising affects sales, namely via the changes in the retail price that a strategic retailer makes in response to changes in demand following manufacturer advertising. The total demand effect of advertising thus comprises the direct effects of advertising on market shares, and the indirect effects coming through adjustments that the retailer makes to the in-store prices of all the brands in a given product category in response to the shifted demand due to advertising. We match advertising data for four different categories (both food and non-food) to store-level scanner panel data, which also include information on wholesale prices. Controlling for wholesale prices, we establish in a reduced-form model that the retailer reacts to manufacturer advertising by changing retail prices instead of simply imposing a constant markup on the wholesale price. To further explore the role of the strategic response of the retailer in a systematic fashion and quantify the effects derived in the decomposition, we estimate a discrete-choice model of demand and determine the magnitude of the direct and indirect effects. We find that the indirect effect of advertising through retailer prices is about half the size of the direct effect, and thus substantively affects advertising effectiveness.     

Are Local TV Markets Separate Markets?

In sweeping revisions the US Telecommunications Act of 1996 relaxed rules respecting broadcast TV ownership regulations. In particular Congress directed the Federal Communication Commission (FCC) to conduct a rulemaking on whether the 'duopoly rules' preventing businesses from owning multiple broadcast stations in the same market should be relaxed, modified or eliminated. Naturally, this directive raises questions concerning competition. Specifically, would concentration and consolidation of local media firms have deleterious effects on advertising rates, output and consumer choice? In the present paper we examine, using own-price and cross-price elasticity demand estimates, the question of whether local TV markets constitute a separate market for advertising. Our structural tests, with appropriate caveats, reveal that local TV advertising is not, by itself, a distinct market - one relevant for antitrust action.     

Exciting on Facebook or competent in the newspaper? Media effects on consumers’ perceptions of brands in the fashion category

Abstract

Media investments are continuously shifting from traditional media like newspapers to digital alternatives like websites and social media. This study investigated if and how media choice between the two rival channels can influence consumers’ perceptions of a novel brand. 504 Swedish retail fashion customers participated in an experiment to evaluate the identical advertisement placed either in a national newspaper or on Facebook. The results revealed that advertising in a newspaper can have a positive effect on brand equity facets and purchase intention through brand personality perceptions of being competent, while advertising on Facebook have similar effects but through perceptions of being exciting. Besides some evidence that choice between traditional and new media affects brand personality this study is one of the first attempts to incorporate media channel choice into the broader customer-based brand equity framework. The results from this particular study suggest that media channel choice should be considered from a brand equity building perspective at least in the fashion category. This study shows that different media channels could complement each other strategically, as traditional media channels still can have valuable and unique contributions to brand building through brand personality perceptions, especially for brands striving to be perceived as competent.     

Media generations and their advertising attitudes and avoidance: a six-country comparison

This cross-national survey (N = 5784) examined generational differences in media use, advertising attitudes and avoidance for five media (websites, social media, mobile phones, television, newspapers) in six countries (Germany, Spain, United Kingdom, United States, France, and the Netherlands). The results showed that the net generation and the newspaper generation, but not the TV generation, were clearly distinct in the frequency of their media use in all six countries. For advertising attitudes, generational patterns were visible, however, neither for all media nor in all countries. When generational differences did occur, the net generation was on the positive end, whereas the newspaper generation was usually the most negative. For advertising avoidance, generational patterns were less present and consistent. The findings point out interesting directions for future research. Practical implications for advertisers and media planners are discussed.     

Impacts of Generic and Brand Advertising in the U.S. Potato Market

Abstract

The impacts of generic and branded advertising in the U.S. fresh potato, retail frozen potato, and potato chip markets are examined under exogenous and endogenous raw potato supply. The Almost Ideal Demand System is used to estimate the demand components. The general equilibrium elasticities derived from the complete model are used in a simulation analysis to assess the cross-commodity effects of incremental increases in advertising expenditures on equilibrium prices, quantities, revenues, and profits in each sector. The endogeneity of grower supply mitigate the impacts of advertising in the raw commodity sector and in the retail sectors.     

Context effects of TV programme-induced interactivity and telepresence on advertising responses

This article provides an analysis of the relationship between annual advertising expenditures and sales, using a time series regression procedure, for beer, wine, and liquor sold in the United States from 1971 to 2012. Information from these four decades provides a comprehensive analysis of the relationships of numerous variables with aggregate alcohol category sales. Even though per capita alcohol consumption has not changed much throughout this period, alcohol advertising media expenditures for all alcohol beverages have increased almost 400% since 1971. This study has provided evidence of consumption changes across categories of alcohol beverages over the past 40-plus years with the preponderance of those changes significantly correlated to fluctuations in demography, taxation and income levels – not advertising. Despite other macro-level studies with consistent findings, the perception that advertising increases consumption exists. The findings here indicate that there is either no relationship or a weak one between advertising and aggregate category sales. Therefore, advertising restrictions or bans with the purpose of reducing consumption may not have the desired effect. Implications on policy decisions regarding advertising controls are addressed.     

Book Reviews

This study applies data envelopment analysis to evaluate the financial efficiency of a sample of 63 top US pharmaceutical advertisers, based on their sales and media advertising expenditures in 11 key media outlets (i.e. network TV, cable TV, syndicated TV, spot TV, magazines, Sunday magazines, national newspapers, newspapers, network radio, national spot radio, and outdoor). The analyses reveal that, on average, 35% of a pharmaceutical advertising budget is wasted, the largest portion of which is on network TV. In addition, the results of tobit regression indicate that magazines and Sunday magazines significantly contribute to the advertising inefficiency.     

Media preferences among young consumers in Bangladesh: a multidimensional approach

Generally, preference toward an advertising media is judged by company-driven effectiveness assessment parameters such as reach, frequency, sales and return on investment. This paper, on the other hand, by using structural equation modeling offers a three-dimensional 20-item ‘media effectiveness assessment model’ based on the quantitative judgment of young consumers. After that the preferences of male and female consumers toward seven different media with respect to the assessment criteria of the model have been captured and compared. Item-wise results of the study show that radio received highest priority by male consumers, whereas, TV and newspaper are the second priority. Female respondents on the other hand put highest preference toward magazine followed by radio. Popularity of radio among young consumers is noticeable. Dimension-wise comparisons revealed that men and women consumers preferred radio and billboard, respectively as the best media for ‘customization’ ability. However, for advertisement ‘positioning’ men and women prioritized TV and magazine, respectively. Finally, billboard and radio were found to be most ‘interactive’ as opined by male and female, respectively. The methodology of this study is based on 783 samples collected from the young executives (both male and female) of Bangladesh during September–November, 2014.     

Two Studies on Using Specialty Advertising in Retail Sales Contests

Two studies were conducted to assess the impact of specialty advertising as a promotional tool in retail sales contests. In both cases, specialty advertising was directed toward the retail sales force rather than the consumer. It was felt that s~ecialtv advertisine could perform a reinforcement and reminder role as well as a mot: vating role for encouraging retail salespeople to participate in a contest. In the first study with Chick-fil-A, specialty advertising had an overall positive impact on employee performance. Total sales vol- ume increased in three of the four stores studied, while it increased in only two of the four stores that did not receive specialty advertis- ing. And while sales volume as a whole increased during the contest period, the largest percentage of increase occurred in those stores where specialty advertising was used. In the second study, the FanFair study, the effectiveness of spe- cialty advertising was very apparent. In both markets where special- ty advertising was used, Dallas and Phoenix, sales increases in graphics-the contest'objective-far exceeded total store sales. In the market where specialty advertising was not used, Milwaukee, sales of graphics were down much more than total store sales. Specialty advertising was found to be particularly cost effective in the Dallas market, where profitability far exceeded the cost of the specialties.     

Magazine Sales Promotion: A Dynamic Response Analysis

This paper studies the effectiveness of a type of nonprice promotion often used in the European magazines industry to diminish the decline rate of periodical sales, in which a value pack is sold containing the magazine issue plus another product. Magazines are sold simultaneously with and without promotion at different prices, and promotions are serialized by fractioning the additional product across different issues of the magazine. Although promoting magazines contemporarily may cannibalize nonpromoted sales, this loss is compensated by a long-term increase in nonpromoted sales caused by product awareness and loyalty improvements. This strategy is increasingly used as an innovative form of product advertising.