Online advertising has short- and long-term effects. Little is known, however, about which online advertising channel works best to address particular customer groups when short- and long-term effects, are taken into account. We look at the sales effect of search engine marketing (SEM), banner advertising, price comparison advertising (PCA) and coupon/loyalty advertising (CLA) on new and existing customers. Our analysis, which uses a sample of 2.8 million purchases, shows that SEM has the longest effect, followed by banners, CLA, and PCA. We find that CLA works better for existing customers than for new customers, whereas PCA works better to attract new customers.
To marketing researchers and practitioners, advertising effectiveness and accountability are topics of continuous interest (e.g., Clark, 1999, McDonald, 2010 and Rust et al., 2004). Many studies have analyzed the parameters of advertising effectiveness by showing which advertisements work when, for which consumer, and under what circumstances (e.g., Shamdasani et al., 2001 and Tellis et al., 2005). Researchers have shown that traditional advertising media, such as TV, radio and print, have both short-term and long-term effects (Naik and Raman, 2003 and Vakratsas and Ma, 2005) and that long-term effects vary by type of advertising medium and can continue, as in the case of newspapers, for more than a week (Berkowitz, Allaway, and D'Souza 2001a). Moreover, advertising should be target group specific (e.g., in terms of the chosen advertising medium) in order to achieve the highest impact (Iyer et al., 2005 and Reutterer et al., 2006).
With the advent of the Internet and its growing importance as a place to do business, online advertising has become a topic of increasing interest to academic research (e.g., Ha, 2008 and Kim and McMillan, 2008). In the past decade, Internet advertising has grown beyond simple banner advertising to include new advertising models and online channels (e.g., on-demand advertising such as advertising through search engines and price comparison Web site advertising) that make better use of the Internet's unique potential for interaction between consumer and advertiser (Rappaport 2007).
Overall, our analysis indicates that online ad channels have long-term effects that can differ by target group: SEM has the longest effect (8 days), followed by banners, CLA and PCA (~ 1 day). The sales impact of CLA is significantly better for ECs than for NCs, whereas PCA works better to attract NCs. To avoid biased results, long-term effects specific to particular target groups should be part of every analysis of advertising effectiveness.
