Can B2B firms benefit from competitors' advertising? A dynamic business environment perspective on an emerging communication form

Abstract

Advertising, which has traditionally played an ancillary role in B2B firms' marketing efforts, gains momentum, with firms' spending levels steadily increasing and recent research showing positive effects on firms' sales revenues. However, the sales effect generated through a firm's B2B advertising is likely to critically depend on competitors' advertising investments. While B2C research suggests that competitive advertising reduces the effectiveness of own advertising, this study applies the dynamic NEST (nested business environment) framework to propose the opposite effect, considering the emerging nature of advertising in business markets and the impact of competitor advertising in establishing this form of communication. This opposite, synergistic effect means that advertising competition increases, instead of decreases, the effectiveness of own advertising in B2B contexts. Using a large panel dataset of 2723 B2B firms, this study finds evidence for the synergistic effect and also shows that it reduces the sales effect of sales force spending, i.e. an established communication form in business markets. However, the results also show that the effect's presence or absence critically depends on the business context. This research provides important insights for researchers and managers concerning competitive advertising effects in different B2B contexts.