Are we making money of online advertising?


Advertising as we know these days have changed so much from what it used to be a decode ago. First thing any marketing manager thinks of when it comes to devising a marketing strategy is to figure out the online advertising channels. But is it really bring in money? How much of the money invested in online advertising is actually getting converted to sales revenue? Paul R. Hoban and Randolph E. Bucklin, analyzed this same concept in a paper that we are going to dig deeper in this blog post.

Challenge with the study:

The main challenge in studying the effects of online ads on consumers is there is a widespread selection effect. Users browsing patterns and their preferences affect the impact of the advertising. To overcome these selection bias, the paper focuses on profitability or conversion during the purchase funnel. The life cycle of the user follows the four different stages: Non visitor, visitor, registered user and converted customer.


The method used here is to have two different groups: Control and Treatment group. Control group have similar ad displays as that of the treatment group, but their ads are of some charity firm whereas the treatment group had a focused firm for advertising. This is to help control the selection bias. During the experiment, for the first digital interaction the users were randomly selected into one of the two groups.

Findings from the experiment:

Based on the experiment, they have found the effectiveness for various stages of the users as follows:

Non Visitor: Helps in creating the brand image since the user has never visited the brand’s website. Here the ads
have a little effect in conversions.

Visitor: Users who have already visited the site before and had not created registered accounts, seeing the online ads will have little or no effect. If they hadn’t done that previously, there is a very little chance the ads will trigger them to do.

Registered Users: On the other hand, for registered users, the ads might trigger an emotion motivating them to make a purchase and in that case they have a good effect in conversion rates.

Converted Users: People who had already made a purchase with the brand, the ads might serve as a memory but might not have an effect in making them purchase again. There was no clear result obtained from the paper about the converted users.


The experiment showcased how the online advertising will impact different customer group segments. By leveraging this and varying the frequency and carryover effects we can increase the marginal effects of exposure. For example, this effect is more prominent for non visitors and less prominent for already converted users. The main limitation of this paper is that the experiment is carried out only for one particular firm. So the results can’t be generalized. There could be same users opening multiple browsers viewing similar ads. That might hinder the estimation. Thus this paper provides numerous opportunities for further research in this domain.


Paul R. Hoban Randolph E. Bucklin February 2015, “Effects of Internet Display Advertising in the Purchase Funnel: Model-Based Insights from a Randomized Field Experiment”

Manchanda, Puneet, Jean-Pierre Dubé, Khim Yong Goh, and Pradeep K. Chintagunta (2006), “The Effect of Banner Advertising on Internet Purchasing,” Journal of Marketing Research, 43 (1), 98-108.

How Brand Community Practices Create Value

We all know that the power of the brand. Also, we do know that part of power of the brand holds in the consumers themselves. They create, co-create value, actively collaborate in the firm’s innovation process and sometimes co-create the entire marketing program. But what happens inside of the companies themselves and in which ways they interact with consumers?

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Your Google results matter: BrandYourself

Let’s be honest. How many platforms and websites are we on? Is it feasible to keep up with all our online data on Twitter, Instagram, LinkedIn, Facebook, Alumni Websites ect.? At the same time, whenever we have to meet someone new, we instantly Google that person to get our first impression. Companies invest heavily in their online presence and Google results, but nowadays all individuals should consider putting more effort in personal branding. 1 billion names are googled daily and 75% of hiring managers are required to google job applicants. It is well known that recruiters often Google candidates, so we shouldn’t risk a new position or a potential new date with poor Google presence.

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Staff Finder: The end of employment agencies

According to Marjolein ten Hoonte, permanent contracts and collective employee agreements do not exist in 2030. Ten Hoonte is the general manager Labor Market of Randstad employment agency. According to her, the only thing what matters in the future labor market are your skills and competences (, 2011). If this is true, then creating a platform between employees and employers would be a great opportunity.

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Get The People Talking

As the internet and rise of online communities has changed the role and possibilities of word-of-mouth (WOM) for both companies and consumers, companies are increasingly looking into techniques to influence WOM. The reason is simple, happy customers are the best advertisers that you can have (Sernovitz, 2006). Kozinets et al. (2010) studies the current situation that marketers are facing and how to employ social media marketing methods in order to leverage online WOM.

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“Better a good neighbor than a far friend”. Nextdoor, the social network for your neighborhood.

Social networks like Facebook, Twitter, and LinkedIn, make it easier than ever to connect with your friends, relatives, and business relations. Although technology makes it easier to connect with everybody, we often forget what happens in our own neighborhood. In the United States for example, a third has never met their own neighbors (Dahl, 2015). The importance of a good relationship with your neighbors is translate into the Dutch expression:

“Better a good neighbor than a far friend”

Nextdoor is trying to solve this problem by making people aware of what happens in your neighborhood and connect the local community.

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Economics of Prosumers

Nowadays, there is a dramatic push towards renewable energy in the utility sector. Not only individual governments of various countries, but also corporations, gather together to both discuss the environmental impact of the energy sector and draft new policies to reduce carbon emissions. Conventional power plants that are generating electricity from fossil fuels are slowly being phased out, and at the same time installation of solar PV panels and wind turbines is becoming mainstream (DECC 2014). As a result, there is a dramatic shift in the electricity production spectrum.

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Consumers are less selfish than companies perceive

Have you ever been to a retail store to just check out a certain product, but end up buying it elsewhere online for a much cheaper price? We all must have done that at least once. If we look back at the situation, we can actually describe it as a free ride on the sale service of offline retailers by visiting them to obtain information about the product, with no intention of buying. We often require firms to behave fairly, but never thought about the other side, the customers.

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Capturing the voice of customers with virtual prototyping

With the increasing demand of customers to be able to customize, companies are analyzing what customers really want by ‘capturing the voice of the customer’. According to Carulli et al. (2013), this is one of the strategies that can be used to have an effective product development process. By capturing the voice of the customer, it is possible to incorporate customer needs into features of a product. This can be enabled by using the method of virtual reality technologies.

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How far are we willing to go for personalized recommendations?

A week ago I was looking for a pirate costume for a theme party, so I was searching online and visited a couple of website. After finding the perfect outfit, I ordered it and it arrived the next day. However, when I enter Facebook, I still get recommendations for different pirate costumes, even though there is no need for it anymore. 48% of the people tend to spend more when they have a personalized experience, therefore 90% of the companies use personalized recommendations. However, there is a small boundary between helpful personalized and extremely irritating unnecessary ads.

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Never lose your precious time again! – Mobypark

The sharing economy is an increasingly popular concept where valuable assets, such as houses, clothing and parking spaces are shared among individuals. Value co-creation is a key term in the sharing economy, value is created for different sides of the marking by renting and renting out products. Mobypark is an online platform that offers shared parking as a solution to optimize the use of parking spaces in big cities, it is often referred to as the new AirBnB for parking. Owners of private parking spaces, individuals but also hotels, companies, universities, airports and hospitals can rent out their parking spaces at times they don’t need it. Individuals can easily find a car park through or by means of the mobile application.

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Refugees Welcome

Since the beginning of the European refugee crisis in 2014, we have all been confronted with the emerging problems occurring in European members states. News items are covered with disturbing headlines, including: “More than 110,000 asylum seekers crossed the Mediterranean to Europe in 2016” and “EU failure to cope with refugee crisis threatens its very survival”. Although everyone is aware of the increasing flow of refugees into Europe, it might be rejuvenating to re-watch the widespread explanatory video of “The European Refugee Crisis and Syria”.

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More is Less: A Psychologist and a Mathematician go Shopping

Imagine you are presented the same product with a price discount of 33.33% or a bonus pack quantity increase of 50%, which would you choose? If you’re like me your gut went with the 50%, but actually the two are economically equivalent – meaning they result in an identical price per unit. We are psychologically programmed to view discounts as a ‘reduction in loss’ and a bonus pack as a ‘gain.’

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Is Trip Advisor becoming a victim of its own succes?

Currently, Trip Advisor is the biggest travel review website in the world, with approximately 60 million member posting 115 reviews every minute. The key succesfactor for the website it that it appeals as an average Joe, who does not trust brochures and guide books. The website has become so big, that it has significant influence the tourist economies on entire countries.

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Is sharing economy sustainable?

Organizations based on the sharing economy concept are popping up left, right and center. But are these organizations profitable? If yes, is this profit sustainable? These kind of questions can’t be answered yet, since the business model is quite new (started emerging in the early 2000s). But it is quite interesting to do a little research regarding these questions.

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Facebook: a new era

The 24th of February ’16 is going down in the history books. After several campaigns of Facebook users requesting the platform to enable different options (e.g. a dislike button), Facebook introduced this new function yesterday (see the video). The emoticons are called reactions, and enable all users to express their feelings towards a post with the following emoticons: Love, Haha, Wow, Sad and Angry. Their expressions are quite straight forward, and add a lot of new options as extension to the traditional Like, that is still available.

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“We’re a new kind of online community working together as a production company”

I must admit that the first time I have seen Joseph Gordon-Levitt (the actor you might know from ‘A River Runs Through It’ or ‘500 Days of Summer’) introduce HitREC●rd I was very enthusiastic but could not imagine how an open collaborative production company could deliver what takes traditional production companies a great amount of funding, creativity and coordination.   

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Learn from Michael Jackson: Repeat it, and Beat it!

The study “The impact of Ad Repetition and Ad content on Consumer Perceptions of Incongruent Extensions” by Lane R.(2010) emphasizes the importance of repetition. When consumers are exposed to advertisements several times, they tend to be more positive towards a brand or product shown in advertisements. One-exposure to an advertisement may mislead the perceiver.

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Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning

With internet still coming up as a strong way of commerce in this day and age, researchers looked into ways consumers’ purchase decisions can be influenced by each other. Chen et al. (2011) started looking at online word of mouth and online observational learning as ways this might happen.

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