With a substantial amount of resources being spent on online advertising, examining the effectiveness of online advertising is now an important subject for scholarly investigation. Cross-product integration has become a source of market advantage and a strategic necessity for online advertising. The issue of product integration has not been sufficiently researched in the online advertising effectiveness literature. To fill this gap, this research examines the antecedents of online advertising effectiveness with an emphasis on the influence of product integration. Viewing product integration as a stimulus that influences users’ information processing mechanisms, this article proposes a research model and validates it using two studies: one quasi-experiment and one field study. The findings suggest that the integration level influences the strength of the perceived tie between focal and promoted products, like portals and their associated services, which in turn has a significant impact on advertising effectiveness. Product integration level also has a direct impact on advertising effectiveness. This article contributes to both research and practice by advancing the overall understanding of online user behavior as well as by providing important insights regarding online information product promotion design.
Over the last decade, Internet advertising has grown into the third most popular advertising media after newspapers and TV. According to the report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PWC), Internet advertising revenues in the US were estimated at $21.1 billion in 2007, a 25% increase over the previous revenue record of nearly $16.9 billion in 2006 (IAB 2008). Also, the Kelsey Group predicted that global Internet advertising revenues will reach $147 billion by 2012 (Pacheco 2008). The success of this market can be partially attributed to the growth and popularity of online information product promotion. Because of the widespread existence of hyperlinks, online information product vendors can easily make use of existing products to promote new ones (Sviokla and Paoni 2005). For example, after its great success in the search engine market, Google has used its search engine to promote its email product (Gmail). Similarly, after becoming a leading portal, Yahoo! used its portal to entice existing users to use its instant messenger product (Yahoo! Messenger). Because a substantial amount of resources are being spent on online advertising, whether and to what extent cross-product integration is an effective online advertising strategy is a critical question for these product providers as well as other vendors (Lohtia et al. 2007).
Online advertising is a form of promotion that uses the Internet and World Wide Web for the purpose of delivering marketing messages to attract customers (Meyers and Gerstman 2001). Recently, online advertising effectiveness has received considerable attention from academics and practitioners. Research has largely examined the influence of content and design elements on advertising effectiveness (Lohtia et al., 2003, Robinson et al., 2007, Calisir and Karaali, 2008 and Zhang and Kim, 2008). However, product integration, as one of the important design elements, remains under-researched. Information product integration is defined as the assembling of different information products together to facilitate data sharing (such as information about a user profile, and preference setting), to enhance the overall value to end users through products’ mutual cooperation ( Nambisan, 2002a and Sengupta, 1998). Since customers are increasingly placing emphasis on cross-product integration, the success of new products is largely dependent on their integration with other relevant products ( Iansiti, 1995, Iansiti, 1998 and Cusumano and Yoffie, 1998).
This study was motivated by the scant prior research on the efficacy of product integration in the online advertising context. A noteworthy feature of our study is that we conceptualized and operationalized online advertising effectiveness with different measurements instead of simply using the click-through rate. This approach is consistent with the emerging theory of online advertising effectiveness in the marketing field (Chandon et al. 2003).
Our study is one of the first to examine new product advertising effectiveness from both the variance and process perspectives. Drawing on the stimulus-organism-response paradigm, we first developed a conceptual explanation of the role of a perceived tie in explaining the underlying relationship between product integration and advertising effectiveness in an online environment. We also offered empirical evidence from an experimental study and a field study. The results provide support for the proposed model that a perceived tie is the key explanatory mechanism that links product integration level to advertising effectiveness in the online environment.
