Faculty of Economics and Business Administration Publications Database

The effectiveness of different forms of online advertising for purchase conversion in a multiple-channel attribution framework

Wiesel, Thorsten
Pauwels, Koen
Volume: 33
Number: 3
ISSN-Print: 0167-8116
Link External Source: Online Version
Year: 2016
Keywords: Marketing attribution; Content integration; Customer initiated; Structural vector autoregression; Restricted impulse response function

The Internet has given rise to many new forms of advertising. Scientific studies have focused on individual reactions to specific advertising forms in isolation and have offered little guidance for aggregate-level budget allocation decisions, which are typically based on simple rules. This article compares the long-term effectiveness of nine forms of advertising—seven online and two offline—by means of a structural vector autoregressive model and restricted impulse responses. For five product categories, we investigate how these forms of advertising generate traffic, affect conversion, and contribute to revenue. We find that content-integrated advertising is the most effective form, followed by content-separated advertising and firm-initiated advertising. Although online advertising forms have similar power to drive traffic, content integration dominates content separation in the area of progression toward purchase. Last-click attribution underestimates content-integrated activities and suggests online advertising budget allocations that yield 10%–12% less revenue than the status quo, whereas the model's proposed online advertising budget allocation yields a 21% revenue increase over the status quo. These results highlight the payoffs for companies that integrate content into online media.