The Cross Effects of Advertising Channels.

It wasn’t too long ago that marketers were limited in their marketing methods. They had to take their marketing budgets and disburse the funds across only a few channels such as television, radio or print advertising. However, that was then and this is now.
Now, retailers and marketers have new methods to supplement offline sales thanks to the Internet. Online and digital advertising are vastly different from traditional marketing methods. The audience is different, the delivery is different, and more often than not, the message is different.

The Problem Retailers Are Facing.

The problem retailers and marketers are facing has to do with this new frontier called the Internet. Sure, the Internet isn’t all that new in retrospect, but when it comes to marketing, there are a lot of channels that have gone unexplored. It can take a long time for the executives of the company to take a leap of faith and invest in a new marketing channel.
The problem comes paired with an opportunity. Although the global market has experienced the financial crisis, advertising budgets continue to expand. They’re not going for traditional methods, either. No – they’re going for online audiences. This opportunity is open to anyone willing to embrace it.
In an article written by Harald Van Heerde, Ph.D, he looked at the crossover effects of advertising and if you’ll see an impact of one on another like a spike for in-store sales after an online advert and vice versa. We’ve got the abridged version for you here.

Advertising Channels Are Not Contained.

The problem with taking a leap of faith and investing in a new advertising channel is that there isn’t enough data to support some of these methods. Some of the evidence must be empirical. In other words, even though the data isn’t there, we can look and see the success that some of these marketing methods have experienced. Empirical data are observed – not necessarily based on theory or logic.
Attempting to backup some of this empirical evidence with anecdotal evidence, he needed to investigate the cross effects of advertising channels. In other words, when you spend money in one area of advertising, you see an impact in another area. This crossover effect is what he wanted to validate.

The Return from the Advertising Expenditures.

From a managerial and executive perspective, it only makes sense that we need to know what kind of return we can expect before we pour money into an empirical model. We may experience success, but we also can’t operate on blind faith.
We need to look at several different businesses before we can make our own judgments and come to our own conclusions about the effects of advertising. This is the kind of evidence that retailers need before they’re able to justify the advantages of online marketing methods to supplement offline, physical sales.

The Empirical Validation.

The entire purpose is to prove that there is the presence of cross-channel advertising effects. Unfortunately, very little is known about the effects of cross-channel advertising. The real question he was asking was how paid advertising methods can cause a consumer to visit a website & make a purchase or to visit the physical store and make a purchase.
Any purchase that a consumer makes can take place in either the physical store or through an online channel. The cross-effects of these channels means that a firm can place an online advertising banner and expect a return through a purchase at a physical store. Likewise, the same firm can place an offline ad on a billboard or through a radio advertisement and expect a return through an online purchase. The real question is which is which. How do we measure the effect of advertising in one channel and how it may cross over to another channel?

Which One Has the Highest ROI?

Through an extensive study and data set published by an upmarket clothing retailer, he came to some interesting conclusions. The return on investment was calculated by a subtracting the investment from the profit and dividing it by the investment (Profit-Investment/Investment=ROI).
Each method had to be tested separately and then collectively. In this particular dataset, he found that paid search advertising was the most effective marketing method. This is what happens when you utilise pay-per-click efficiently. Online paid search advertising was over twice as effective as traditional marketing methods.
What is interesting to note is that many retailers and marketers are staying away from banner advertising. However, banner advertising was found to be the second most effective marketing method in this study. It was concluded that that banner advertisements were a primary contributor to offline purchases in physical stores.

The Cross-Channel Effects Are Strong.

There are only so many ways one can measure the cross-channel effects of advertising. It may be one of the more difficult abstract concepts to measure adequately. What can be concluded is that some methods are more efficient than others – particularly that of paid search advertising.
The entire point of an exercise like this is to help retailers allocate their limited marketing budgets better so that they can enjoy a higher rate of return. Speak to Grow Digital Marketing and find out how we can help your business get the most out of Google search and display advertising.