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- 09 Feb 2012
- Sharpening Your Skills
Sharpening Your Skills: Online Marketing
In this collection from our archives, Harvard Business School faculty discuss the latest research on online marketing techniques, including consumer reviews, video ads, loyalty programs, and coupon offerings. Open for comment; 0 Comments.
- 12 Oct 2011
- Research & Ideas
Creating Online Ads We Want to Watch
The mere fact that an online video advertisement reaches a viewer's computer screen does not guarantee that the ad actually reaches the viewer. New experimental research by Thales S. Teixeira looks at how advertisers can effectively capture and keep viewers' attention by evoking certain emotional responses. Closed for comment; 0 Comments.
- 02 Aug 2011
- Working Paper Summaries
To Groupon or Not to Groupon: The Profitability of Deep Discounts
For consumers, online discount vouchers (like those offered by Groupon.com) have obvious appeal: discounts as large as 90 percent. But for retailers offering the deals through the site, does the publicity compensate for the deep hit to profit margins? This paper sets out to help small businesses decide whether it makes sense to offer discount vouchers. Research was conducted by Harvard Business School professor Ben Edelman, Business Economics PhD candidate Scott Duke Kominers, and by Sonia Jaffe of the Harvard University Department of Economics. Key concepts include: For retailers, discount vouchers provide price discrimination, letting merchants reach customers who know about the business, but wouldn't ordinarily go there without a discount. These vouchers also benefit merchants through advertising, simply by informing consumers of a merchant's existence via e-mail. For some merchants, the benefits of offering discount vouchers are sharply reduced if individual customers buy multiple vouchers. As a marketing tool, discount vouchers are likely to be more effective for businesses that are relatively unknown and have low marginal costs. Closed for comment; 0 Comments.
- 09 Nov 2010
- Working Paper Summaries
The Unbundling of Advertising Agency Services: An Economic Analysis
From 1982 through 2007, U.S. advertising agencies increasingly "unbundled," or disaggregated, services such as copywriting and media placement, moving away from the industry's traditional one-stop-shop model. At the same time, agencies began to charge clients based on a fee-for-service system, rather than collecting commissions on media placements. The researchers analyze this trend and consider how it may be interpreted by the economic theory of bundling. Key concepts include: Agencies are more likely to unbundle services with increasing size and diversification but are less likely to do so with increasing age. A strong trend toward unbundling over time is evident, a result partially explained by increases in media prices during the study period. With the arrival of new media technologies and lower-priced digital ads, holding companies are considering re-organizing their media agencies with digital and other capabilities so as to position themselves as offering clients broader "marketing solutions" beyond media planning and buying. Such "re-bundling" may also reflect the lower prices for digital advertising. Closed for comment; 0 Comments.
- 07 Jun 2010
- Research & Ideas
Improving Brand Recognition in TV Ads
Advertisers pay millions of dollars to air TV ads that are subsequently ignored by a third of viewers. New research by HBS professor Thales S. Teixeira offers a simple, inexpensive solution for marketers to retain brand recognition. Key concepts include: Repeating or "pulsing" brief images of a brand can significantly reduce the likelihood that viewers will zap it. Altering commercials to mimic a pulsing strategy is a virtually cost-free fix for a significant payoff. Viewers' attention should be managed as any other scarce resource. Closed for comment; 0 Comments.
- 17 Aug 2009
- Research & Ideas
Quantifying the Economic Impact of the Internet
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. Open for comment; 0 Comments.
- 27 Jul 2009
- Research & Ideas
Social Network Marketing: What Works?
Purchase decisions are influenced differently in social networks than in the brick-and-mortar world, says Harvard Business School professor Sunil Gupta. The key: Marketers should tap into the networking aspect of sites such as Facebook. Key concepts include: Some social network users are influenced by the purchases of their friends. Of these users, 40 percent show a strong "keeping up with the Joneses" behavior, increasing sales by 5 percent. "High-status" users are more likely to not purchase something that others have bought. On social networks, viral campaigns may work better than advertising. Closed for comment; 0 Comments.
- 04 May 2009
- Research & Ideas
What’s Next for the Big Financial Brands
Some of the great financial brands such as Merrill Lynch built trust with customers over decades—but lost it in a matter of months. Harvard Business School marketing professor John Quelch explains where they went wrong, and what comes next. Key concepts include: Turmoil and distrust in the financial services sector is an open invitation to non-financial companies to exploit the brand vacuum created by the demise of the likes of Merrill Lynch and the Royal Bank of Scotland. Financial brands today must address the most basic of consumer concerns: Will my money be safe with this company? Financial brands should continue to advertise but with messages that help customers with recession-relevant product and service offerings. Closed for comment; 0 Comments.
- 05 Mar 2009
- Working Paper Summaries
CPC/CPA Hybrid Bidding in a Second Price Auction
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. Key concepts include: When advertisers and ad platforms evaluate payment metrics, it seems they currently focus on effects on parties' incentives. For example, parties recognize that if billing is proportional to the number of measured clicks, then click fraud would expose advertisers to unwarranted advertising expense. With such constraints in mind, parties attempt to balance the various competing incentives. We propose an additional factor advertisers and ad platforms ought to consider: which advertisers are systematically most likely to favor which payment metrics. Averages that fail to condition on advertisers' choices may badly misestimate an advertiser's true characteristics—causing the platform to select ads that later prove to be ill-advised. Readers with suggestions are invited to contact Professor Edelman and Hoan Soo Lee. Closed for comment; 0 Comments.
- 18 Dec 2008
- Working Paper Summaries
Concentration Levels in the U.S. Advertising and Marketing Services Industry: Myth vs. Reality
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. Key concepts include: Concentration levels vary across the advertising and marketing service industry's nine sectors, but all are within the range generally considered indicative of a competitive industry. From 1977 to 1992, census data show that the number of firms and establishments and the level of agency receipts in real terms increased. After 1992, however, the number of firms and establishments decreased while real agency receipts have continued to grow, and concentration levels have tended to increase. Between 2002 and 2006, the four largest holding companies captured a fifth to a fourth of the total U.S. revenue flowing to suppliers of advertising and marketing services each year. After several waves of mergers and acquisitions, the collective position of the major holding companies in the United States is considerably less than dominant. Closed for comment; 0 Comments.
- 14 Oct 2008
- Research & Ideas
Should You Bring Advertising Expertise In-House?
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. Key concepts include: The likelihood of a firm internalizing advertising services decreases as the size of its advertising expenditures increases. Cost efficiencies and savings are the major reasons for pursuing the in-house advertising route. Some industries more than others develop in-house advertising expertise, particularly technology-based and creative industries. The make or buy decision relating to advertising services is complex, and should be based on a careful economic analysis. Closed for comment; 0 Comments.
- 21 May 2008
- Research & Ideas
Going Negative in Political Advertising
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. Key concepts include: Negative ads ask us to vote against someone rather than for someone, an approach that sometimes works in political advertising. Companies rarely run negative ads against competitors; typically competitors won't be mentioned at all. In politics the winner takes all, an environment that encourages desperate candidates to go negative. Closed for comment; 0 Comments.
- 05 May 2008
- Research & Ideas
Connecting with Consumers Using Deep Metaphors
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. Key concepts include: Deep metaphors are powerful predictors of what customers think and how they react to new or existing goods and services. The seven deep metaphors discussed in Marketing Metaphoria appear across a variety of products. Recent advances in various disciplines are providing concepts and techniques enabling marketers to dig into what consumers don't know they know. Closed for comment; 0 Comments.
- 24 Mar 2008
- Working Paper Summaries
Optimal Deterrence when Judgment-Proof Agents Are Paid In Arrears—With an Application to Online Advertising Fraud
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. Key concepts include: Online advertising markets are one of many markets where agents may be effectively unreachable through the legal system. Online advertising contracts presently lack any institution by which the payment structure can enforce good practices. Improving detection technology remains the preferred deterrent of online advertising fraud. Appropriate selection of a payment delay can achieve the benefits offered by contingent payment in other markets. Closed for comment; 0 Comments.
- 24 Mar 2008
- Research & Ideas
Reducing Risk with Online Advertising
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. Key concepts include: Delaying payment separates the wheat from the chaff and good affiliates from bad ones. Rule breakers know that the longer they have to wait to be paid, the more likely they are to get caught. In online advertising, it is often hard to know whether you've received the service you've contracted to receive and have paid for. Online affiliate programs are a big source of fraud. Because these programs are perceived to be low-fraud marketplaces, advertisers omit many ordinary protections they use when dealing with little-known suppliers. How to compute the optimal delay for payments is different depending on how prevalent bad affiliates are, the profit margins of bad affiliates, and how quickly your good suppliers need to get paid. Closed for comment; 0 Comments.
- 17 Sep 2007
- Research & Ideas
Broadband: Remaking the Advertising Industry
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. Key concepts include: Traditional advertising vehicles such as television are becoming less interesting to advertisers because of fragmented viewership and inadequate user data. Broadband technology is becoming more important to advertisers because of its ability to move the consumer closer to a transaction decision and to deliver clearly segmented audiences. The advertising industry is wrestling with this transformation in part by merging with media companies and by launching creative ad alternatives. Closed for comment; 0 Comments.
- 16 Aug 2006
- Research & Ideas
Is MySpace.com Your Space?
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. Key concepts include: Social networking sites such as MySpace.com are emerging as powerful advertising platforms reaching millions of desirable consumers. They will be advertising rivals to established Internet sites such as Google and Yahoo. Although MySpace has been the subject of some community criticism, MySpace advertisers don't seem frightened off. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
The Motion Picture Industry: Critical Issues in Practice, Current Research & New Research Directions
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. Key concepts include: Business tools such as quantitative and qualitative research and market research should be applied to the decision-making process at earlier stages of development. Technological developments will continue to have unknown effects on every stage of the movie-making value chain (production, distribution, exhibition, consumption). Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Measuring Consumer and Competitive Impact with Elasticity Decompositions
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. Key concepts include: Combine the consumer and the competitive points of view for a more complete understanding of the marketing investment's impact. Closed for comment; 0 Comments.
What Neuroscience Tells Us About Consumer Desire
It's easy for businesses to keep track of what we buy, but harder to figure out why. Enter a nascent field called neuromarketing, which uses the tools of neuroscience to determine why we prefer some products over others. Uma R. Karmarkar explains how raw brain data is helping researchers unlock the mysteries of consumer choice. Closed for comment; 0 Comments.