A recent study entitled Advertising Bans and the Substitutability of Online and Offline Advertising, published in the April issue of the Journal of Marketing Research reveals that in the age of the world wide web, it turns out that banning billboard advertisements for alcohol, cigarettes and drugs are useless. Criticism for these types of traditional ads take the place of the ever growing online advertising, which frequently make traditional ad more effective. In a perverse bottom line, changes in online advertising effectiveness are related to offline ad restrictions.
“No one has shown that before,” commented Avi Goldfarb, a marketing professor with the University of Toronto’s Rotman School of Management and co-author of the study. “I was very surprised by how big the effects were,” adds Goldfarb. “Your online advertising becomes more effective if people can’t see ads for your products or don’t see ads for your products offline.”
The study found consumers 8% less likely to buy alcohol in 17 U.S. states where billboard ads for alcohol are banned; but the gap narrowed to 3% if those consumers had seen alcohol ads online.
Goldfarb’s co-author, Catherine Tucker, assistant professor of marketing at MIT Sloan Management adds, “If you look back in history, local governments have constantly tried to ban various forms of advertising, whether it’s video games, junk food, alcohol, or cigarettes. It shows how the Internet is making that kind of regulation harder.”
While those figures seem low, each percentage point equals hundreds of millions of advertising dollars, says Tucker.
Goldfarb and Tucker used U.S data from 275 advertising campaigns for specific alcoholic products, and ad effectiveness appeared specific to new products, suggesting that “the ads are really about information and creating awareness, rather than persuasion,” Goldfarb said.