Practice Prize Paper---Marketing's Profit Impact: Quantifying Online and Off-line Funnel Progression

Authors:
Thorsten Wiesel;Koen Pauwels;Joep Arts
Affiliations:
Department of Marketing, Faculty of Economics and Business, University of Groningen, 9700 AV Groningen, The Netherlands;Özyeğin University, 34662 Altunizade Üsküdar, İstanbul, Turkey;Faculty of Economics and Business Administration, VU University Amsterdam, 1081 HV Amsterdam, The Netherlands
Venue:
Marketing Science
Year:
2011

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Abstract

Inofec, a small-to medium-sized enterprise in the business-to-business sector, desired a more analytic approach to allocate marketing resources across communication activities and channels. We developed a conceptual framework and econometric model to empirically investigate (1) the marketing communication effects on off-line and online purchase funnel metrics and (2) the magnitude and timing of the profit impact of firm-initiated and customer-initiated contacts. We find evidence of many cross-channel effects, in particular, off-line marketing effects on online funnel metrics and online funnel metrics on off-line purchases. Moreover, marketing communication activities directly affect both early and later purchase funnel stages (website visits, online and off-line information, and quote requests). Finally, we find that online customer-initiated contacts have substantially higher profit impact than off-line firm-initiated contacts. Shifting marketing budgets toward these activities in a field experiment yielded net profit increases 14 times larger than those for the status quo allocation.