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.
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.