Online ads circumvent offline ad bans, researcher says

May 31, 2011 By Ken McGuffin

Not allowed to advertise your booze or smokes on a billboard? That's okay. Research shows online advertising works especially well in places with government ad bans.

“If you want to regulate the offline world, you have to remember that people have access online too and you have to think about how that online world is going to mitigate the effects of your regulation,” said Avi Goldfarb, a marketing professor at the University of Toronto’s Rotman School of Management who co-wrote a study on the topic with Catherine Tucker of MIT’s Sloan School of Management.

The researchers compared data on respondents in 17 U.S. states where there are restrictions on alcohol, with data for respondents in 33 states that did not regulate such advertising.

Respondents in states subject to restrictions were eight percent less likely to say they would purchase an alcoholic beverage. But that gap narrowed to three percent when some of those consumers were exposed to online advertising for the product, suggesting the internet hurts the ability of local government to curb the effect of advertising on their residents.

Smaller local studies reinforced these findings, showing an increase in regulation of offline advertising increased the effectiveness of online ads, making them a “substitute” for the offline format.

The study shows that online advertising works especially well with consumers who have limited knowledge of a product - either because the product is new in the marketplace or because the consumer has not had exposure to it through other forms of advertising.

Besides the implications for authorities seeking to regulate advertising for things like tobacco, prescription drugs, and gambling, the study has implications for products that may be hard to advertise offline for other reasons besides legal restrictions.

“With people who you have a hard time reaching offline, those are the cases where online advertising is the most valuable,” said Goldfarb.

While the findings may lead authorities to question the usefulness of advertising bans that do not include the online world, they may still be effective with narrowly-targeted groups, such as restricting certain kinds of ads around schools, Goldfarb said.

“Regardless of the situation, you need to remember people have this other channel to access information and that should inform your regulation. It shouldn’t necessarily prevent your regulation.”

Explore further: Highly connected CEOs more likely to broker mergers and acquisitions that harm firms

More information: The study, which was published by the Journal of Marketing Research, is available online at www.marketingpower.com/AboutAM… dvertising_bans.aspx

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Dug
not rated yet May 31, 2011
What advertisers need to remember is that when you force me to look at your ad - on television in the middle of a program or a pop-up in the middle of an online article - your company name goes into a little database. Companies in that forced advertising database - never ever get any business from me. I search for the products I need and research them online and select what I need. Dear advertisers - the day of forcing people to look at your ad is long gone and what remains is more than negative it's a total waste of your advertising dollar. Focus on having and accurate and informative web presence and positive customer reviews if you want my business. I'm over 60 - so what does that tell you.