May 31st, 2011

Online alcohol ads get boost from offline bans

CBC News

Online ads for products such as alcoholic drinks are far more effective in places where advertising on billboards, in newspapers and other offline media is banned, a new study suggests.

In U.S. jurisdictions with offline advertising bans, viewing an online ad made people eight per cent more likely to say they would buy the product, according to the study published in the Journal of Marketing Research.

In contrast, consumers in jurisdictions without offline advertising restrictions were just three per cent more likely to say they would buy a product after viewing an online ad.

“I was very surprised by how big the effects were,” lead author Avi Goldfarb, a marketing professor at the University of Toronto’s Rotman School of Management, said in an interview Monday. “Your online advertising becomes more effective if people can’t see ads for your products or don’t see ads for your products offline.”

Across Canada, there are provincial and federal restrictions on advertising for products such as cigarettes, alcohol, gambling and pharmaceuticals.
New products

In Goldfarb’s study, the difference in effectiveness of the ads seemed to be specific to new products.

Consumers were 10 per cent more likely to say they planned to purchase a new alcoholic product after seeing an online ad it if they lived in a U.S. jurisdiction with restrictions on alcohol advertising, For older or well-known products, there was no difference in the influence of the online ads in jurisdictions with and without offline ad bans. That suggests that the ads are really about information and creating awareness, rather than persuasion, Goldfarb said.

While the results suggest that companies could get better value for money by targeting online advertising in jurisdictions with offline ad bans, Goldfarb does not recommend that companies do that because of the risks that it could violate some of the bans in place and get them in legal trouble.

The study’s findings do call into question the effectiveness of offline advertising bans for products such as tobacco, prescription drugs and gambling in the online age.

“It’s hard to prevent people from getting information, especially at a local level,” Goldfarb said.

While most national advertising bans include online advertising, regulating online ads at a provincial, state or municipal level is a challenge, he said.

But he said offline advertising bans may still be a good idea, depending on their purpose. For example, a ban on alcohol advertising in a college newspaper would still send a message that the product is not endorsed by the college, even if students find out about it through other advertising.

Goldfarb and his co-author, Catherine Tucker at the Sloan School of Management at the Massachusetts Institute of Technology, conducted the study by looking at U.S. data from 275 advertising campaigns for specific alcoholic products provided by a marketing company.

For each campaign, the marketing firm showed either an online ad for the product or an ad for something else, such as a charity, on certain websites. Afterward, users were asked to complete a survey about what kinds of products they planned to purchase. An average of 223 people completed the survey for each of the 275 advertising campaigns.

Goldfarb and Tucker compared the data for U.S. jurisdictions that had advertising restrictions with those that didn’t. They also looked at places where the restrictions changed, and the results confirmed that the change in effectiveness of the ads was caused by offline advertising restrictions.

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