Should You Invest in Banner Advertising for Offline Products?

Lara Lobschat
Key Takeaways
What? New research investigates whether firms whose sales occur mostly offline should invest in online advertising.

So What? The authors show that online banner ads can significantly affect offline sales indirectly by providing information for nonrecent consumers and by building the brand for recent consumers.

Now What? In particular, firms that promote changing assortments with distinct campaigns, such as “fast fashion” retailers and hard discounters, can benefit from banner advertisement, even if most sales are offline.

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Given the increasing opportunities offered to advertise products and brands to potential customers online, it’s not surprising that firms’ online advertising expenditures have risen steadily, and a great deal of that spending is directed toward banner advertising. Online banner advertising may be a natural choice for online retailers, but what about retailers that realize the majority of their sales in the offline channel? With our research, we answer three questions to help managers make the right decisions regarding the effects of online banner ads on offline sales. We were fortunate to have access to unique, single-source data from GfK Panel Services Germany about a German retailer with a well-established multichannel distribution system to answer these questions.

First, we wanted to help managers understand which customers should be targeted to create an improvement in offline sales. We segmented customers based on the recency of their last touchpoint with the firm, particularly, focusing on recent online customers (those who made one or more website visits in any of the four past ad campaigns) and nonrecent online customers (those who did not make website visits in any of the four past ad campaigns).

Second, we determined whether online banner ad campaigns directly affect offline sales or whether they first drive consumers to the firm’s website and then prompt consumers to make an offline purchase. Whether online advertising campaigns affect offline sales indirectly or directly is crucial knowledge for website design and sales attribution.

Finally, we asked whether online banner ad campaigns generate brand-building effects beyond a specific campaign. We thus distinguished between the effects of distinct campaigns for distinct products and the long-term impact of these campaigns. Insights into the long-term effects can help marketers accurately evaluate the impact of short-term campaigns.

Differences in recent and nonrecent consumers

Our results suggest a different decision-making process for recent and nonrecent online customers. 
Nonrecent online consumers are probably in an earlier stage of the purchase process and seem to become activated by the firm’s banner advertising. They then visit the firm’s website to search for more information. We also find that nonrecent online consumers are more likely to conduct an offline purchase after visiting the firm’s website during the current ad campaign. We thus conclude that banner advertising indirectly affects offline purchases. This kind of customer can thus be targeted with banner ads that provide concrete information about the product offering. Because we also included the effect of TV ads on both customer groups, these recommendations apply to that medium as well. TV ads that are aired during time slots when mostly nonrecent consumers are watching can be used to highlight website information, where consumers can get more information.

In contrast, recent online customers are already in a later stage of the purchasing process and the information contained in the banner ads has most likely already fulfilled their information needs. For these customers, online banner ads have a brand-building effect—that is, an effect on offline sales beyond the current campaign. Online banner ads should thus be used to remind consumers about the brand. Moreover, for these customers, TV advertising should aim to transfer emotions to stimulate consumers beyond just providing information.

Our study shows that relying solely on intermediate online performance measures—such as click-through rates—as indicators of subsequent purchase behavior is not optimal. For nonrecent online consumers, the number of website visits can determine the success of a banner ad campaign, because we find a strong link with offline sales. In contrast, recent online consumers tend not to show an online response to banner ads, because they already know about the information provided. A focus on online metrics would thus miss the impact of online banner ads on recent online consumers. Also, to appreciate the value of banner ads for driving offline sales, firms should look beyond immediate online performance measures and allow for dynamics. A focus on within-campaign performance measures is too narrow, as the brand-building effect of online banner ads would be ignored. Offline retailers thus should consider both online and offline performance measures and account for cross-campaign effects to evaluate the impact of online banner ad campaigns.

Conclusion

We show that in our case, a firm selling mostly through the offline channel can indeed benefit from online banner advertising. Our results are especially of interest to firms that promote changing assortments with distinct campaigns such as “fast fashion” retailers or hard discounters. Banner advertisement allows these firms to effectively promote products for offline sales as well as to build their brand.

Article Link

Lara Lobschat, Ernst C. Osinga, and Werner J. Reinartz (2017) What Happens Online Stays Online? Segment-Specific Online and Offline Effects of Banner Advertisements. Journal of Marketing Research: December 2017, Vol. 54, No. 6, pp. 901-913.


 
ABOUT THE AUTHOR:
Lara Lobschat
Lara Lobschat is Assistant Professor of Marketing, University of Groningen (email: l.lobschat@rug.nl).

COMMENT: