Businesses around the advertising-supported Internet have incredible multiplier effects throughout the economy and society. Professor John Quelch starts to put some numbers on the impact.
In spite of the cultural and social revolution in the rise of social networking sites such as Facebook and MySpace (and in South Korea, Cyworld), the business viability of these sites remains in question. While many sites are attempting to follow Google and generate revenues from advertising, will advertising be effective? If friends influence the purchases of a user in a social network, it could potentially be a significant source of revenue for the sites and their corporate sponsors. Using a unique data set from Cyworld, this study empirically assesses if friends indeed influence purchases. The answer: It depends. Findings are relevant for social networking sites and large advertisers.
How should online advertisers measure and pay for advertising deliveries? Options include pay per impression (CPM), per click (CPC), per action (CPA), or in proportion of the dollar value of merchandise sold. The advertisers who choose to pay one way may differ, systematically, from those who choose to pay in some other way. HBS professor Benjamin Edelman and doctoral student Hoan Soo Lee present the problem in an algebraic model in anticipation of measurement to follow in future work.
Published in 2008
How concentrated is the U.S. advertising and marketing services industry? Over the past several decades, the effects of deregulation, globalization, and technological innovation have reshaped the advertising and marketing services industry as they worked their way through the economy. Estimates from the existing literature are typically based on data from trade sources and present a picture that emphasizes rising concentration over time and domination by a handful of holding companies. These estimates are suspect as they suffer from a number of conceptual and measurement limitations. This paper analyzes changes in concentration levels in the U.S. advertising and marketing services industry, using data that have been largely ignored in past discussions of the economic organization of the industry.
Advertising agencies have traditionally offered services to firms that couldn't afford or didn't find value in having that expertise in-house. But a recent study indicates more firms than previously thought are developing internal advertising units. Q&A with HBS professor emeritus Alvin J. Silk.
Companies rarely run negative ads against competitors, but political candidates often do. Why the difference? It's a byproduct of our political system's winner-take-all approach, says professor John Quelch.
Consumer needs and desires are not entirely mysterious. In fact, marketers of successful brands regularly draw on a rich assortment of insights excavated from research into basic frames or orientations we have toward the world around us, according to HBS professor emeritus Gerald Zaltman and Lindsay Zaltman, authors of Marketing Metaphoria. Here's a Q&A and book excerpt.
It is commonplace for large entities (both advertisers and ad networks) to enter into relationships with numerous small agents such as Web sites, blogs, search syndicators, and other marketing partners. For example, one well-known affiliate network boasts more than a million affiliates promoting offers from the network's hundreds of merchants, and Google contracts with numerous independent Web sites to show Google's "AdSense" ads. Although these advertising agents are often small, they can take advantage of technology to claim payments they have not earned. In practice, the legal system cannot offer meaningful redress to an aggrieved advertiser or ad network. This paper argues that delayed payment offers a more expedient alternative—a sensible stopgap strategy for use when primary enforcement systems prove inadequate.
Fraud is fairly easy in the world of online advertising, particularly for determined adversaries. In this Q&A, HBS professor Ben Edelman, who designs electronic markets, explains how contract terms can be managed to both reduce advertisers' risks of being defrauded and reward good suppliers. "The idea here is to make everyone better off, except of course the fraudsters," Edelman says.
Published in 2007
Evolving from the Marlboro Man in the 1960s to the Subservient Chicken in a recent Web campaign, advertising is undergoing a radical transformation. Harvard Business School professor Stephen P. Bradley, who is cowriting a book on how broadband technologies are remaking many industries, discusses how advertising is responding to the challenges.
Published in 2006
Social networking sites such as MySpace.com have demographics to die for, but PR problems with parents, police, and policymakers. Are they safe for advertisers? A Q&A with Professor John Deighton.
Published in 2005
Just how much do movie stars contribute to box office success? HBS professor Anita Elberse researched the notion of "star power" to better understand how A-list players contribute to Hollywood's bottom line.
This research examines how advertising affects market-wide sales expectations for pre-release movies. The authors use data on advertising expenditures and an online stock market simulation, The Hollywood Stock Exchange (HSX), to track more than 280 movies released between 2001 and 2003. Their findings show that advertising affects the updating of market-wide expectations prior to release, and that this effect is stronger the higher the product quality.
Do marketing actions expand the market or steal business from rival firms? One research method suggests that all of the demand created by an incremental advertising investment would be generated by market expansion; another suggests that the same increase would be stolen from rival firms. Steenburgh explains why these seemingly contradictory results actually are complementary and provide a more comprehensive understanding of the investment's impact.
This paper reviews research and trends in three key areas of movie making: production, distribution, and exhibition. In the production process, the authors recommend risk management and portfolio management for studios, and explore talent compensation issues. Distribution trends show that box-office performance will increasingly depend on a small number of blockbusters, advertising spending will rise (but will cross different types of media), and the timing of releases (and DVDs) will become a bigger issue. As for exhibiting movies, trends show that more sophisticated exhibitors will emerge, contractual changes between distributor and exhibitors will change, and strategies for tickets prices may be reevaluated.
Making advertising hard to find is just one way companies are rewriting conventional marketing strategies, says Harvard Business School professor Youngme Moon.
Published in 2004
Although they are prescription drugs, Viagra, Prozac, Allegra and many others are pitched directly to consumers. Do physicians take notice? HBS professor Alvin Silk and Harvard's Joel Weissman discuss a recent study.
What do consumers expect of global brands? Does it hurt to be an American brand? This Harvard Business Review excerpt co-written by HBS professor John A. Quelch identifies the three characteristics consumers look for to make purchase decisions.
From consolidation to the growing clout of mass retailers, structural changes have hit the wine industry. Professor Michael Roberto discusses the move from elitism to mainstream appeal.
Published in 2003
The man-of-action hero has been the central myth in American culture for twenty years. So why have only Budweiser and Nike tapped into this story? Professor Douglas B. Holt explains.
