Profiting from Targeted Advertising: Exploring synergies among media channels

The rapid rise of online sales has introduced technologies that promise better targeting of consumers for specific ads. Thus far the literature has not differentiated between online advertising strategies and, instead, explores whether one strategy is more effective than another in identifying a consumer with a propensity to buy a particular product, in the belief that a higher transaction rate is better. This paper empirically explores the advantages associated with the adoption of behavioral targeting (BT) jointly to paid search advertising. Because of tracking technologies, firms may able to reduce information asymmetries about consumers and define a better advertising strategy which exploits synergies across different media channels. We use a novel dataset to analyze classic advertising measures (Click-throughrate and Conversion Rate) for multiple online advertising strategies of multiple firms in twenty different industrial sectors over six years. We find that BT complements the adoption of sponsored advertising, thus offering new insights on marketing strategies implementation. We also find that there exist asymmetric spillovers across media channels that, ultimately, benefit the overall firm performance.