The impact of online display advertising and paid search advertising relative to offline advertising on firm performance and firm value
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Published version
Date
2020-12-01
Authors
Bayer, Emanuel
Srinivasan, Shuba
Riedl, Edward J.
Skiera, Bernd
Version
Published version
OA Version
Citation
E. Bayer, S. Srinivasan, E. Riedl, B. Skiera. 2020. "The impact of online display advertising and paid search advertising relative to offline advertising on firm performance and firm value." International Journal of Research in Marketing, Volume 37, Issue 4, pp. 789 - 804. https://doi.org/10.1016/j.ijresmar.2020.02.002
Abstract
This research examines the impact of online display advertising and paid search advertising relative to offline advertising on firm performance and firm value. Using proprietary data on annualized advertising expenditures for 1651 firms spanning seven years, we document that both display advertising and paid search advertising exhibit positive effects on firm performance (measured by sales) and firm value (measured by Tobin's q). Paid search advertising has a more positive effect on sales than offline advertising, consistent with paid search being closest to the actual purchase decision and having enhanced targeting abilities. Display advertising exhibits a relatively more positive effect on Tobin's q than offline advertising, consistent with its long-term effects. The findings suggest heterogeneous economic benefits across different types of advertising, with direct implications for managers in analyzing advertising effectiveness and external stakeholders in assessing firm performance.
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License
© 2020 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).