Advertising has the power to influence how consumers experience, think, and feel about brands, but the sequence of these mindset effects may differ by brand and category. This paper analyzes how the mindset factors of cognition, affect, and experience mediate advertising effects on sales, using data from 178 fast-moving consumer good brands in 18 categories over seven years. The authors compare the models proposed in the literature and conclude that the concept of sequentiality in advertising effects holds up well. Importantly, the sequence varies across brands, with the affect cognition experience (ACE) sequence being the most common. Brand differentiation and the hedonic versus utilitarian nature of the product category moderate the incidence of the ACE sequence: this sequence is even more likely for utilitarian products and less differentiated brands. For managers, the results show that the last mindset factor in the sequence is the most important in driving sales, with cognition being most responsive to advertising among the mindset factors. Moreover, in utilitarian categories, highly differentiated brands can expect about seven times higher advertising responsiveness of affect than less differentiated brands.
The business impact of campaign setup: Reducing media spend through frequency capping optimisation
This paper demonstrates the impact of a specific campaign setup best practice — frequency capping — on media performance, highlighting potential cost savings from optimising this setting. Focusing on this single practice, we show how its implementation can improve efficiency and reduce media waste. Analysing thousands of campaigns across DV360 and Meta, we assess whether frequency capping was enabled (compliant/non-compliant) and examine its influence on media spend and reach. An optimised XGBoost model, trained via grid search and cross-validation, estimates media spend based on delivered results. Counterfactual simulations on 500 campaigns show that enabling frequency capping can decrease media spend by 27–38 per cent without negatively impacting outcomes.1 These findings underscore the value of frequency capping as a targeted, data-driven strategy for enhancing advertising efficiency and managing budgets effectively.
Amplifying Off-Site Purchases with On-Site Retail Media Advertising
Retail media is of growing interest to brands, and online retailers offer a large collection of product information that is freely available for consumers’ online and offline purchase decisions. In this study, the authors map webrooming across ten product categories by combining internal data from consumer browsing behavior at an online retailer and survey responses from the same customers about their offsite behavior. Moreover, they build a random forest machine-learning model to predict the mag- nitude of webrooming across categories. They find that webrooming is economically substantial. On average, for every 10 cus- tomers who research the product category on-site and buy on-site, 17 other customers research the product category on-site and buy off-site. As to retail media’s impact, upper-funnel and always-on online ad forms are associated with a higher number of online searchers in the laptop category who buy the brand offline. Beyond finding support for their propositions, the authors provide directions for future research on the cross-channel effects of retail media and how they generalize across brands, cat- egories, and retailers.
The Bible of publishing: a perspective inspired by Don Lehmann
Why and when to launch new products during a recession
Do new products launched during a recession perform better? Does the severity of the recession matter? Are products more successful when launched earlier or later in a recession? These are all questions of managerial importance that as yet remain unanswered in the extant marketing literature. The authors analyze two datasets: 1) 8,981 product launches in 20 United Kingdom fast-moving consumer goods categories over 18 years and 2) 1,071 product launches in the United States automotive market over 63 years. The results reveal products launched (a) during a recession and (b) later rather than earlier in the recession survive longer, while more severe recessions are associated with shorter survival. The same findings emerge for the dependent variables of sales and market share. This paper thus enriches marketing theory on recessions by conceptualizing and quantifying timing effects on new product launch success. For managers, the results demonstrate the benefits of countercyclical launching of new products during recessions and of marketing proactively in such economic conditions.
Talay, Pauwels and Seggie, Journal of the Academy of Marketing Science, 2023
Why Brands Grow: The Power of Differentiation and Penetration
Oliver Koll and I xamine the complex relationship between consumers’ attitudes toward a brand and its market outcomes. An analysis of more than 150 brands in five countries reveals the intricate reciprocal connections between customer perceptions and behaviors, brand differentiation, and market penetration in both stable and emerging markets.
WhyBrandsGrow The Power of Differentiation and Penetration Pauwels Koen
Practice Prize Winner: Direct mail to prospects and email to current customers? Modeling and field-testing multichannel marketing
Multichannel retailers need to understand how to allocate marketing budgets to customer segments and online and offline sales channels. We propose an integrated methodological approach to assess how email and direct mail effectiveness vary by channel and customer value segment. We apply this approach to an international beauty retailer in six countries and to an apparel retailer in the United States. We estimate multi-equation hierarchical linear models and find that sales responsiveness to email and direct mail varies by customer value segment. Specifically, direct mail drives customer acquisition in the offline channel, while email drives sales for both online and offline channels for current customer segments. A randomized field experiment with the beauty retailer provides causal support for the findings. The proposed reallocation of marketing resources would yield a revenue lift of 13.5% for the beauty retailer and 9.3% for the apparel retailer, compared with the 6.5% actual increase in the field experiment.
Cite as: Valenti, A., Srinivasan, S., Yildirim, G., & Pauwels, K. (2023). Direct mail to prospects and email to current customers? Modeling and field-testing multichannel marketing. Journal of the Academy of Marketing Science, 1-20.
How much does digital advertising accelerate new product success?
Many new products are launched in e-commerce. While advertising is believed to enhance new product success, managers often lack the numbers to quantify this benefit to the company. Retail websites offer specific success benchmarks, such as pre-purchase product views, purchase conversion and post-purchase reviews. This paper’s main thesis is that while new products can succeed with or without advertising, digital advertising can help products achieve success faster. Across five categories, this research shows that digital advertising on Amazon.com can cut the time needed to reach success levels by more than half, compared to products that reach these same benchmarks without such advertising.
Bertozzi, Giacomo, et al. “How much does digital advertising accelerate new product success?.” Applied Marketing Analytics 7.4 (2022): 318-328.
Please access the preprint version here: How much does digital advertising accelerate new product success_pauwelspreprint
Bias from Voluntary Disclosure of Advertising Spending: Consequences and Remedies
While advertising is a crucial marketing component, publicly listed companies possess considerable latitude in disclosing their advertising spending in financial statements. This research shows that firms opting to voluntarily disclose advertising spending differ systematically from those that do not in multiple ways. To explore the ramifications of these disparities, we use machine learning techniques to estimate undisclosed advertising spending and examine whether advertising effectiveness differs between firms with and without voluntary advertising disclosure. The results indicate that firms opting not to disclose their advertising spending realize a significantly reduced effect of advertising on customer-based brand equity. Moreover, for these firms, advertising is associated with higher systematic risk, lower firm value, and lower advertising sales elasticity. These findings suggest that advertising is less effective in product and financial markets for firms electing to keep advertising information private. Consequently, research using only voluntarily disclosed advertising likely overestimates the impact of advertising on firm value and advertising’s sales elasticity and underestimates the impact of advertising on systematic risk for the full population of advertising firms. Correcting for this bias reduces advertising’s sales elasticity and reveals that advertising does not significantly affect firms’ systematic risk.
Bias from Voluntary Disclosure of Advertising Spending: Consequences and Remedies
While advertising is a crucial marketing component, publicly listed companies possess considerable latitude in disclosing their advertising spending in financial statements. This research shows that firms opting to voluntarily disclose advertising spending differ systematically from those that do not in multiple ways. To explore the ramifications of these disparities, we use machine learning techniques to estimate undisclosed advertising spending and examine whether advertising effectiveness differs between firms with and without voluntary advertising disclosure. The results indicate that firms opting not to disclose their advertising spending realize a significantly reduced effect of advertising on customer-based brand equity. Moreover, for these firms, advertising is associated with higher systematic risk, lower firm value, and lower advertising sales elasticity. These findings suggest that advertising is less effective in product and financial markets for firms electing to keep advertising information private. Consequently, research using only voluntarily disclosed advertising likely overestimates the impact of advertising on firm value and advertising’s sales elasticity and underestimates the impact of advertising on systematic risk for the full population of advertising firms. Correcting for this bias reduces advertising’s sales elasticity and reveals that advertising does not significantly affect firms’ systematic risk.
Promoting Data Richness in Consumer Research: How to Develop and Evaluate Articles with Multiple Data Sources
As stated in the mission of the Journal of Consumer Research (JCR) (2022) and a recent editorial (Schmitt et al. 2022), JCR is a multi-disciplinary journal where consumer research provides insights about consumers and consumption in the marketplace in a way that meaningfully extends the knowledge from one of our core disciplines (e.g., psychology, sociology, economics) about a consumer-oriented construct. Unfortunately, the labels “consumer research” and “consumer behavior” have come to connote far more than the focus of the work—just as, somewhere along the way, “consumer behavior” and “quant” came to imply a particular type of data source (and associated analysis methods) that is primarily used to study theory and phenomena of interest (experiments vs. “field data”). Why this strong association between consumer-relevant questions, data, and methodology? One reason may be that the field rewards specialization. Another may be due to the incentive structure in business schools (Stremersch, Winer, and Camacho 2021). Nevertheless, the rigid lines dividing the artificially created sub-disciplines are our own making, for better and worse. One way to address this divide and consequently expand the reach of our research beyond those who specialize in our particular sub-disciplines is to use more than one type of data source when addressing a consumer research question. Such data richness is the key theme of this article.
Journal of Consumer Research,
Download jcr2022
The asymmetric effect of warranty payments on firm value: The moderating role of advertising, R&D, and industry concentration
Changes in firms’ warranty payments are informative signals that enable investors to form timely expectations about potential changes in product quality. The authors’ survey shows that warranty payments affect potential investors’ product quality assessments and stock investment likelihood. Their quantitative analysis reveals an asymmetric stock market reaction: unanticipated increases in warranty payments (which signal quality “losses”) lower stock returns but unanticipated decreases do not affect stock returns. Two important factors moderate this relationship. First, boosting advertising spending attenuates the negative stock return effect of unanticipated increases in warranty payments. Second, unanticipated decreases in warranty payments, which signal quality “gains”, translate into higher stock returns when the industry has become less concentrated. Interestingly, changes in R&D spending do not moderate investors’ response to unanticipated increases or decreases in warranty payments. The authors advise firms to use advertising to lessen the harm from warranty payment increases and to strongly communicate warranty payment decreases in the face of intensified competition. The authors also caution that offering warranties in general does not ensure greater firm value as declining quality firms that myopically offer warranty programs experience lower firm value than those that do not provide warranties.
D Kurt, K Pauwels, AC Kurt, S Srinivasan – International Journal of Research in Marketing, 2021
Please download the paper kurtetalijrm
How much does digital advertising accelerate new product success?
Many new products are launched in e-commerce. While advertising is believed to enhance new product success, managers often lack the numbers to quantify this benefit to the company. Retail websites offer specific success benchmarks, such as pre-purchase product views, purchase conversion and post-purchase reviews. This paper’s main thesis is that while new products can succeed with or without advertising, digital advertising can help products achieve success faster. Across five categories, this research shows that digital advertising on Amazon.com can cut the time needed to reach success levels by more than half, compared to products that reach these same benchmarks without such advertising.
Bertozzi, Giacomo, et al. “How much does digital advertising accelerate new product success?.” Applied Marketing Analytics 7.4 (2022): 318-328.
Please access the preprint version here: How much does digital advertising accelerate new product success_pauwelspreprint
How Social Media drove the 2016 US Presidential Election: a longitudinal topic and platform analysis
with Raoul V. Kübler and Kai S. Manke, July, 2020
Abstract:
To what extent did external events and news versus the candidates’ own actions drive the 2016 election outcome? And were candidates misled if they focused on traditional market research versus the newer probabilistics polls? Based on the dynamic political will formation framework, the authors address these questions with a national daily dataset combining polling, donations, and TV advertising data with social media interactions to all candidates’ posts of the two candidates on Twitter, Facebook, and Instagram. Persistence modeling reveals that donations followed rather than drove the candidates’ polls. The probabilistic polls show a different impact of candidate ads and statements, news coverage, and fake news than do the traditional polls. TV ads on the economy or gun control, and on terror threats were most effective for respectively Hillary Clinton and Donald Trump. Topics matter, as fake news about a candidate hurts her chances on one topic, but benefits her on another topic. Moreover, platforms matter: Clinton’s chances benefitted from promoting women issues on Instagram, but declined from doing so on Twitter. Her moral language on Fairness Vice and social media users’ on Authority Virtue made voters less likely to vote for her, but more likely to share fake news about her and to talk positively about Trump. While news coverage had minimal impact, fake news on Clinton’s emails, shared on her Facebook page, greatly damaged her election chances. This fake news impact was most pronounced for seniors, Hispanics and high earners – demographics who moved towards Trump in the last weeks before the election. The authors draw lessons from the past election to advise where, when and how to drive the political conversation.
O2O lifts profits, even offline sales
Blog
Introduction:
Online-to-offline (O2O) channels offer innovative ways to order daily products and services online (via apps) and have them delivered fast offline. Enjoying rising popularity among consumers, the global pandemic saw their growth accelerating. Delivery Hero, the world’s largest food delivery app, saw orders double, while Instacart added 300,000 workers in eight weeks. In BrandZ’ 2020 global brand rankings, Meituan is a top ten raiser, increasing its brand value by 27% to $24B, having evolved into ‘a one-stop O2O super app that people use to navigate everyday life tasks’. The rise of delivery services like Meituan and Alibaba’s Ele.me (‘Are you hungry?’, shown below with video at https://www.alizila.com/video/what-is-ele-me/) also drove the boom in O2O retail, expected to grow 57 % in China during 2020, according to Kantar. https://www.kantar.com/campaigns/brandz/global/
Click here to read the full blog
When and why attitude surveys still matter in the consumer decision journey: Enduring attitudes and contextual interest
with Bernadette van Ewijk, Journal of Interactive Marketing
Full Article
Abstract:
Consumers leave traces of key interest to managers on their journey to purchase. Next to traditional survey-based attitudes, readily available online metrics now show aggregate consumer actions. But how do survey response metrics and online action metrics relate to each other? To what extent do they explain and predict brand sales across consumer categories? This article shows that surveys and online behavior provide complementary information for brand managers. Times series data for 32 brands in 14 categories reveal low correlations but substantial dual causality between survey metrics and online actions. Combining both types of metrics greatly increases the model’s power to explain and predict brand sales in low-involvement categories. By contrast, high-involvement categories do not gain much from adding survey-based attitudes to a model including online behavior metrics. The authors synthesize these generalizations in a new framework relating enduring attitudes to the contextual interest expressed by online actions. This new framework helps managers assess both types of metrics to drive brand performance depending on whether their goal is short-term sales or long-term brand health.
Click here to read the full paper
Marketing DOs and DONTs during a recession
Social media’s impact on the consumer mindset: When to use which sentiment extraction tool?
Journal of Interactive Marketing, with Raoul Kubler and Anatoli Colicev, 2020
Full Article
Abstract:
User-generated content provides many opportunities for managers and researchers, but insights are hindered by a lack of consensus on how to extract brand-relevant valence and volume. Marketing studies use different sentiment extraction tools (SETs) based on social media volume, top-down language dictionaries and bottom-up machine learning approaches. This paper compares the explanatory and forecasting power of these methods over several years for daily customer mindset metrics obtained from survey data. For 48 brands in diverse industries, vector autoregressive models show that volume metrics explain the most for brand awareness and purchase intent, while bottom-up SETs excel at explaining brand impression, satisfaction and recommendation. Systematic differences yield contingent advice: the most nuanced version of bottom-up SETs (SVM with Neutral) performs best for the search goods for all consumer mind-set metrics but Purchase Intent for which Volume metrics work best. For experienced goods, Volume outperforms SVM with neutral. As processing time and costs increase when moving from volume to top-down to bottom-up sentiment extraction tools, these conditional findings can help managers decide when more detailed analytics are worth the investment.
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Deriving Value from Conversations about your Brand
MIT Sloan Management Review, with Brad Fay, Ed Keller and Rick Larkin, Winter 2019
Short Article
Introduction:
Research shows that both online and off-line customer conversations drive
purchase decisions — but they require separate marketing strategies.
Nordstrom, the Seattle-based retailer, had a memorable 2017. In early February, Donald Trump, then the newly elected U.S. president, took to Twitter to berate Nordstrom for dropping the Ivanka Trump clothing line, complaining that the company had treated his daughter “so unfairly … terrible!” The tweet set off a powerful reaction in social media. Our research showed the number of weekly mentions of the Nordstrom brand on Twitter and other sites surged by 1,700%, while the tone of those conversations (as measured using natural language processing, which interprets meaning from adjacent words and context) swung sharply from positive to negative.1 However, in off-line conversations (measured via surveys), the sentiment stayed positive. Amidst these mixed signals, Nordstrom rolled through the 2017 holiday season with a 2.5% sales increase over the prior year.
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A broader view on brands’ growth and decline
International Journal of Market Research, with Lia Zarantonello and Marcello Formisano
Full Article
Abstract:
What does it take to grow a brand? How to avoid its decline? Some popular answers to these questions can be found in the research by Byron Sharp and others from the Ehrenberg-Bass (EB) Institute on “how brands grow.” In this article, we propose that such an approach, despite its strengths, lends itself to some limitations when taken too literally. We maintain that a broader notion and role of branding—encompassing brand equity, brand portfolio, and circular relationship of attitudes and behaviors—should be adopted by marketeers to derive better managerial implications for sustainable brand growth. We, therefore, invite marketers to not oversimplify Dirichlet evidences by thinking of availability as the only (costly) response to all marketing challenges
Click here to read the full paper