Advertising Effectiveness for Multiple Retailer-Brands in a Multimedia and Multichannel Environment

Abstract

An important aspect of multimedia advertising effectiveness that remains unexplored is a customer-level analysis of the relative importance of each medium for multiple retailer-brands within a product category. The increasing availability of customer databases for parent companies containing multimedia ad exposures, sales transactions in several purchase channels, and information across multiple retailer-brands now allows for a broader examination of advertising effectiveness. In this research, the authors monitor 4,000 customers over two years, linking their exposure to three media (email, catalogs, and paid search) to their in-store and online purchases for three retailer-brands in the clothing category. They develop a Tobit model for sales response to multimedia advertising that captures within-brand and within-channel correlations and accommodates individual-level advertising response parameters. Due to the very large number of observations (2.4 million) and random effects (60), the authors employ an emerging machine learning technique, variational Bayes, to estimate the model parameters. They find that email and sometimes catalogs from a focal retailer-brand have a negative influence on other retailer-brands in the category, whereas paid search influences only the focal retailer-brand. However, competitor catalogs often positively influence focal retailer-brand sales, but only among omnichannel customers. They segment customers by retailer-brand and channel usage, revealing a sizeable group of customers who shop across multiple retailer-brands and both purchase channels. Moreover, this segment is the most responsive to multimedia advertising.

The Journal of Marketing Research Today: Spanning the Domains of Marketing Scholarship

“…For example, Lawrence et al (2019) study profitability of multichannel strategies in business-to-business markets by using a mix of field data and experiments, and find evidence for synergistic effects between online and offline channels. Further, Danaher et al (2020) use customer-level data, which are widely available, to study multimedia advertising effectiveness for a multichannel retail environment to uncover cross-media and cross-channel competitive effects. Many new research issues emerge as the use of multiple channels becomes the norm for consumer, business, and services markets.…”

Commercial Success Through Commercials? Advertising and Pay-TV Operators

“…For instance, we would have liked to have had data that would enable us to provide direct evidence on the relative role of advertising to other margins of adjustments (e.g., pricing) as well as how operators allocate their overall advertising budget to different media types and other margins of adjustments (e.g., pricing and quality investment). Studying the intensive and extensive margin adjustments by firms (e.g., Danaher 2017;Danaher and Dagger 2013;Danaher et al 2020) in response to the changing cost advantage of mass advertising is an important area for future research because the technology of running "more local ads" has become available across all types of media from television to online advertising. Relatedly, future research is needed to investigate the potential differential roles and effects of national and local advertising, as well as possible substitutability and complementarity between them.…”

Satisfying consumers all around: a multidisciplinary view of omnichannel retail

“…With the increasing availability of consumer datasets in all touchpoints and channels, the effectiveness of advertising in different media can be better evaluated. Danaher et al (2020) found that emails and sometimes catalogs exert negative effects on other retailer-brand sales in the category, and paid search only has effect on the focal retailer-brand sales. Consumers who shop across multiple retailer brands and both online and offline channels are the most responsive to multimedia advertising.…”

“…Current studies on omnichannel advertising have investigated the effectiveness of omnichannel advertising practices (Danaher et al, 2020;Zhang et al, 2019). With the increasing availability of consumer datasets in all touchpoints and channels, the effectiveness of advertising in different media can be better evaluated.…”