Measurement of Online Advertising Effectiveness and Efficiency

Philipp Lesch

Master's thesis

Effectiveness Criteria in Marketing

Abstract:

The main goal of this thesis is to depict the current status in online advertising effectiveness and efficiency measurement. Within the first sub goal these findings are then compared to the conclusions from the literature review. The second sub goal is to underline interconnections between the use of variables to measure online activities and certain company internal characteristics. The practical perspective can be described as the following: Behavioral measures, such as click-through or leads, are still tremendously popular and seem to hardly be replaced by brand-related variables in the near future. This might be due to their easy interpretation and the direct link to certain outcomes. They also enable marketers to better argue with a superior authority. Effectiveness measures are also more common at the moment than measures of efficiency such as ROI or customer-lifetime value. Compared with the literature review, these practical implications differ significantly. While most researchers argue in favor of brand-related measures or long-term focused variables, these seem not to be widely used in practice yet. Furthermore, while researchers underlined the uncertainty surrounding online advertising measurement, this uncertainty was not confirmed by companies. Most of them were very content with their online activities as well as the ability to measure their outcomes. While the experience in the online sector and duration of online activity not seem to enhance the progressiveness of measurement, the in-depth interviews indicate that companies, who rely heavier on online advertising as a mean of sales, tend to follow a broader measurement policy and tend to dig deeper in the field of online advertising, trying to fulfill their desire to fully understand consumers' online behavior. It might be concluded that companies will increase their online advertising budget in the near future. This development might lead to increased progressiveness of measurement due to the increased financial resources involved in the sector. The increasing budget might force marketers to get a broader picture of their online activities and thus might increase the number of measured variables but also could fuel the need for brand-related measures to capture long-term effects. This trend might also fuel implementation of other long-term measures such as customer lifetime value or return on investment.

Abstract:

The main goal of this thesis is to depict the current status in online advertising effectiveness and efficiency measurement. Within the first sub goal these findings are then compared to the conclusions from the literature review. The second sub goal is to underline interconnections between the use of variables to measure online activities and certain company internal characteristics. The practical perspective can be described as the following: Behavioral measures, such as click-through or leads, are still tremendously popular and seem to hardly be replaced by brand-related variables in the near future. This might be due to their easy interpretation and the direct link to certain outcomes. They also enable marketers to better argue with a superior authority. Effectiveness measures are also more common at the moment than measures of efficiency such as ROI or customer-lifetime value. Compared with the literature review, these practical implications differ significantly. While most researchers argue in favor of brand-related measures or long-term focused variables, these seem not to be widely used in practice yet. Furthermore, while researchers underlined the uncertainty surrounding online advertising measurement, this uncertainty was not confirmed by companies. Most of them were very content with their online activities as well as the ability to measure their outcomes. While the experience in the online sector and duration of online activity not seem to enhance the progressiveness of measurement, the in-depth interviews indicate that companies, who rely heavier on online advertising as a mean of sales, tend to follow a broader measurement policy and tend to dig deeper in the field of online advertising, trying to fulfill their desire to fully understand consumers' online behavior. It might be concluded that companies will increase their online advertising budget in the near future. This development might lead to increased progressiveness of measurement due to the increased financial resources involved in the sector. The increasing budget might force marketers to get a broader picture of their online activities and thus might increase the number of measured variables but also could fuel the need for brand-related measures to capture long-term effects. This trend might also fuel implementation of other long-term measures such as customer lifetime value or return on investment.

Keywords

effectiveness of online advertising, Online advertising, measuring online advertising

Keywords

efficiency of online advertising, measuring online advertising, effectiveness of online advertising, Online advertising, digital advertising

Language used: English

Date on which the thesis was submitted / produced: 6. 11. 2012

Thesis defence

• Date of defence: 17. 9. 2013
• Supervisor: Miroslav Karlíček
• Reader: Petra Pazderková

Vysoká škola ekonomická v Praze

Master programme / field:
Ekonomika a management / International Management